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Virus business loan scheme extended for six months
Tánaiste and Minister for Enterprise, Trade and Employment Leo Varadkar

25 Nov 2020 / business Print

Virus business loan scheme extended for six months

The COVID-19 Credit Guarantee Scheme (CGS) will now stay open for new applications until 30 June 2021, the Department of Enterprise, Trade and Employment has said.

The suspension of redundancy provisions relating to temporary lay-off and short-time work, which arose as a result of COVID-19, will be extended until 31 March 2021. 

The Government has also agreed to fund outstanding applications to the now closed Restart Grant Plus Scheme.

The €2 billion COVID-19 Credit Guarantee Scheme (CGS), launched in September 2020, was brought in to provide low-cost loans to businesses from €10,000 to €1million.

The scheme was originally due to close at the end of the year, but with an average of 180 businesses now drawing down loans each week, applications will remain open for another six months.

This extension has been made possible due to a change in the rules under state aid at EU level. 

Tánaiste and Minister for Enterprise, Trade and Employment Leo Varadkar said: “The COVID-19 Credit Guarantee Scheme is the biggest state-backed loan guarantee in our history. It is part of a larger package of grants, wage subsidies, tax reductions and other low-cost loans, we have put in place to help businesses during this exceptionally difficult time.

Liquidity

“We are now seeing an average of 180 businesses drawing down loans each week, starting from what was a fairly low take-up. The extension of the scheme will give business a level of certainty that if they need liquidity, the Government is here to help.”

The suspension of the redundancy provisions has been extended until the 31 March 2021 to help avoid further permanent job losses.

350,000 people are in receipt of the Pandemic Unemployment Payment (PUP) and 41,200 employers have registered for the Employment Wage Subsidy Scheme (EWSS).

The Government agreed an extension of the end-date was required as crystalising a large number of redundancy claims now could cause hundreds of businesses to fail thus causing even more jobs to be lost.

Redundancy extension date

It also means that the redundancy extension date will be aligned with the date on which the PUP and EWSS is due to end. 

The Tánaiste said: “I want to acknowledge how difficult this year has been for businesses and their staff. I know this news will be really disappointing for some staff who were hoping to take redundancy before the end of the year.

“This was a really difficult decision for the government to make and not one which was taken lightly.  It was taken in the best interests of society as whole in order to avoid the triggering of further business failures and job losses.

Disruption

We know that the first quarter of 2021 will be particularly challenging for many businesses which apart from dealing with considerable trading difficulties due to COVID-19 will also be facing the added disruption and uncertainty of Brexit.  We want to help businesses to survive this period so that we can protect as many jobs as possible and get people back to work as soon as it is safe to do so.”

The Government has approved a total of €685 million for over 117,000 applications, at an average payment of €5,800, since the scheme was launched in May. Approximately 11,000 applications are outstanding to the scheme and the Government has allocated a further €33m to meet this cost.

 

Gazette Desk
Gazette.ie is the daily legal news site of the Law Society of Ireland