The scheme will guarantee 80 per cent of borrowings and is aimed at companies that have lost 15 per cent of actual or projected turnover, according to The Irish Times.
The loans will initially be offered through AIB, Bank of Ireland and Ulster Bank, but other providers may be added.
The Government has said that the interest rates on these loans will be lower than market levels, however the exact rate will be determined by the details of each loan.
Tánaiste Leo Varakdar said the Credit Guarantee Scheme is an "unprecedented measure [to] ensure businesses have access to the finance they need at this unprecedented time”.
The Central Bank has estimated that SMEs may need up to €5.7 billion in liquidity to deal with the impact of Covid-19.
The scheme will only be in operation until the end of the year due to stringent EU rules regarding the provision of state aid to companies, which has been temporarily eased due to the impact of the pandemic.
Loans provided under the scheme range from €10,000 to €1 million. Interest rates will vary depending on the loan, however they will be lower than would otherwise be available in the market. To apply for the scheme,businesses can contact a participating finance provider directly.
It was launched today by Tánaiste and Minister for Enterprise, Trade and Employment Leo Varadkar, Minister for Finance Paschal Donohoe and Minister for Agriculture and the Marine Charlie McConalogue.
Mr Varadkar said: “The past few months have been extremely difficult for Irish businesses. We have seen our small and medium enterprises work hard to adapt and to continue trading in the face of this profound disruption. The Government is determined to help businesses as they operate in a fundamentally changed trading environment."
Mr Donohoe added: “The €2 billion Covid-19 Credit Guarantee Scheme is a critical component of the suite of measures introduced by Government to aid the liquidity and solvency of SMEs. The priority given by Government to SMEs has been reflected in the range of business supports that have been made available including the warehousing of up to €2 billion of tax liabilities by the Revenue Commissioners, the €2 billion Pandemic Stabilisation and Recovery Fund being implemented by Ireland Strategic Investment Fund, the waiving of commercial rates and the wage subsidy scheme that enabled businesses to retain their staff.”
