SBCI Loan – What else do you need to know?

 

The SBCI Loan can be used for working capital requirements and to finance investments. The investments can include but are not limited to:

  • Buying, renewing or increasing tangible assets such as machinery and buildings, but not land.
  • Investing in intangible assets, such as
    • Buying patents and licenses
    • The cost of designing and building a tangible asset
    • Research and development
  • Buying out a business e.g. from a retiring owner or to create new management
  • Non-recoverable business taxes (including VAT) to the extent that they are non-recoverable
  • Purchase of assets (other than real estate) with the purpose of renting them to third parties.

Exiting Banks

Refinancing existing loans held with certain banks deemed to be exiting the Irish market is also allowed, subject to exiting bank acceptance. The Approved list of exiting Banks are:

  • ACC Bank
  • Danske Bank
  • Lloyds/Bank of Scotland Ireland
  • Irish Nationwide/IBRC
  • Anglo Irish Bank/IBRC

Agricultural Sector

SBCI funding is offered to the Agriculture Sector under the specially devised Agricultural Investment Loan Scheme (AILS). It states that SBCI-supported loans are available to agricultural customers for investments only:

a) in tangible assets (excluding land) or intangible assets on agricultural holdings linked to primary agricultural production; or

b) in connection with the processing and/or marketing of agricultural products.

Where a loan is sought for (a) above, the objective of the investment should be at least one of the following:

  1. Improvement of the performance and sustainability of the agricultural holding
  2. Improvement of the natural environment, hygiene conditions or animal welfare standards, provided the improvement goes beyond EU standards in force
  3. Creation and improvement of infrastructure related to the development of agriculture
  4. Achievement of agri-environmental-climate objectives
  5. Restoration or prevention of damage caused to production potential by natural disasters, animal diseases and plant pests.

SBCI-supported loans are not available to agricultural customers:

  • Who are 100% Tillage farmers
  • For working capital
  • To acquire land
  • To fund projects that have already started
  • To purchase animals
  • To purchase or plant annual plants
  • To purchase production rights and payment entitlements
  • For drainage works
  • To refinance existing facilities held with AIB or any other financial institution
  • To support investments required to comply with EU standards in force
  • To support undertakings in difficulty or that are subject to an outstanding recovery order
  • For financing export-related activities towards EU member states or third countries (Non EU Member States)  e.g. the establishment and operation of a distribution network or other current expenditure linked to the export activity
  • For Investment projects that require the SME to use domestic over imported goods.

Note:

  • Projects which are linked to the production on farm-level of biofuels or energy from renewable sources are permitted provided production is limited to the average annual consumption of fuel or energy of the farm. Investments in installations, the primary purpose of which is energy production from biomass, shall not be eligible unless a minimum percentage of heat energy is utilised. Investments in connection with the production of food-based biofuels are ineligible.
  • Projects shall conform with EU legislation and with Irish law on environmental protection under the Protection of the Environment Act 2003. For investment requiring an environmental impact assessment under Directive 2011/92/EU the State Aid shall be subject to the condition that such assessment shall have been carried out and the development consent shall have been granted for the investment project concerned before the date of granting the individual State Aid.

Eligible Costs for the agricultural sector

  • Certain costs associated with agricultural investment projects can be funded using an SBCI Loan:
  • The construction, acquisition or improvement of immovable property
  • The purchase of machinery and equipment up to the market value of the asset
  • General costs linked to expenditure referred to in points (a) and (b), such as architect, engineer and consultation fees
  • The purchase or development of computer software and purchase of patents, licenses, copyrights, trademarks.

The following costs are not eligible for SBCI funding:

  • Working capital
  • VAT (except where it is non-recoverable under Irish law).

Agricultural investment loans must not exceed 1.5 times the amount of eligible costs of the individual project being funded by the SBCI Loan.

For calculating the total eligible costs, all figures used shall be taken before any deduction of tax or other charge and costs shall be discounted to their value at the moment the aid is granted.

 

Applications for an agricultural investment loan supported by the SBCI can only be considered if the application is received prior to work on the project or activity starting.

Excluded Activities/Sectors


SMEs who are involved in an ineligible sector or business activity cannot borrow an SBCI Loan regardless of the loan purpose.
 

SBCI-supported loans are not available to:

  • Financial holding companies
  • Leasing companies associated with a specific manufacturer
  • SMEs providing lease finance to individuals not acting in the ordinary course of business
  • SMEs that are subject to collective insolvency proceedings or that do not fulfil the criteria under its domestic law for being placed in collective insolvency proceedings at the request of its creditors
  • Religious organisations
  • Political organisations
  • Trustees of Clubs/Associations
  • SMEs engaged in:
    • Fisheries or aquaculture
    • Tillage farming (solely)
    • Financial and insurance activities
    • Hazardous waste management
    • Real estate activities
    • Production of weapons and ammunition
    • Production / use of gambling and related equipment
    • Tobacco manufacturing, processing or distribution
    • Manufacturing of fertilisers
    • Activities involving live animals for experimental and scientific purposes
    • Activities which give rise to environmental impacts that are not largely mitigated and/or compensated
    • Sectors which, in the opinion of the bank, are considered ethically or morally controversial or which are forbidden by national law e.g. research on human cloning
    • Buying licences or rights for mineral resource exploitation
    • Pure financial transactions (such as the purchase of shares, or any other financial product).

SBCI-supported loans are also not available for:

  • Purchase of land
  • Purchase of road freight transport vehicles by SMEs performing road freight transport for hire or reward
  • Buying, building or renovating property and land for selling or renting to a third party
  • Speculative commercial/residential development
  • Acquisition of fishing boats
  • Refinancing completed projects
  • Financing export-related activities towards EU member states or third countries (Non EU Member States)  e.g. the establishment and operation of a distribution network or other current expenditure linked to the export activity
  • For investment projects that require the SME to use domestic over imported goods.
  • Purchase of goodwill or intangible assets that enforces a strong market position of the borrower (more than 20% of their market).
  • Financing of tariffs
  • Financing to provide consumer finance.

Important Information

It is important to be aware that, as part of the application process, AIB is obliged to share information about successful applicants with the SBCI. This is primarily to validate eligibility for the scheme, but this information may also be shared with SBCI Funders, EU Bodies and State Bodies. This will be done with regard to obligations under Data Protection legislation. In relation to agricultural investment loans, SBCI may post information on its website about you the customer, the SBCI scheme project and also the loan. If you decide to proceed with this application, you consent to the transfer and use of your information in this manner. Please also be aware that SBCI may also correspond directly with you from time to time.

Lending criteria, terms and conditions apply. Credit facilities are subject to repayment capacity and financial status and are not available to persons under 18 years of age. Security may be required.

Allied Irish Banks, p.l.c. is regulated by the Central Bank of Ireland.

 

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