By John Reynolds on Wednesday 6 May 2020
Linked Finance believes the government’s current approach is failing.
Ireland's leading alternative lenders should be included alongside mainstream banks as part of the government’s expansion of lending to small and medium enterprises (SMEs) hit by the coronavirus outbreak, according to an Irish peer-to-peer (P2P) lender.
Linked Finance believes the government's current approach is failing and has written to the Irish minister for finance Paschal Donohoe to outline its concerns.
It argues the Irish government's existing Capital Guarantee and Covid-19 Working Capital schemes are not working at the scale required.
It points to figures showing that only €11m of the €200m first tranche allocated under the Covid-19 Working Capital scheme had been awarded, with just 56 companies having loans approved over seven weeks since its launch on March 10.
Linked Finance says the administrative burden required of firms to qualify is excessive while the extent of government guarantees is "insufficient" for lenders to be willing to deploy capitals given the extent of uncertainty in the market.
Niall Dorrian, CEO of Linked Finance said: “The clock is ticking for Irish SMEs and it’s vital that the government moves quickly to expand the lending support it can provide."
“Alongside an expansion of capital guarantees should also be the broadening of the channels through which funds are offered to include lenders like Linked Finance.”
“We have the intimate understanding of, and relationships with, SMEs to ensure that funds are deployed rapidly and to the right place.”
“Across Europe we are seeing governments providing much higher levels of support than is available in Ireland, which in the short-term will play a crucial role in getting the wheels of business turning again as those countries emerge from the current lockdown phase of the crisis. Ireland needs to ensure that it too is similarly well-placed.”
“There is a danger that understandable efforts to ensure public money is not misspent, have created layers of complexity that destroy the value of the schemes currently in place.”
“Now is the time for a forceful and wide-ranging response to support an SME sector that provides over two-thirds of the jobs in our economy.”