The Central Bank has issued new regulations concerning lending to small and medium-sized enterprises (“SMEs”) aimed at strengthening SME protections and to facilitate SME access to credit by imposing certain requirements on lenders.

Scope

The new regulations will apply to:

  • “Micro and small enterprises”: enterprises with less than 50 employees which have either or both of the following:-
    • An annual turnover not exceeding €10 million
    • An annual balance sheet total not exceeding €10 million 
  • “Medium-sized enterprises”: enterprises with 50 to 249 employees which have either or both of the following:-
    • An annual turnover not exceeding €50 million
    • An annual balance sheet total not exceeding €43 million

Requirements of Lenders

  • Greater transparency for borrowers in relation to the credit application process
  • Communicating reasons for decline of credit that are specific to an SME borrower’s application
  • Enhanced protections for guarantors
  • Establish and maintain policies and procedures for dealing with borrowers in financial difficulties
  • Warnings to borrowers in danger of being classified as not co-operating
  • Communication with borrowers in financial difficulties
  • Establish and implement an internal appeals procedure
  • Expanded grounds for appeal
  • On-going training for staff concerned with lending to micro and small enterprises

While the requirements are similar for both “micro and small enterprises” and “medium-sized enterprises", there are additional requirements which are relevant for “micro and small enterprises” only thereby offering a higher level of protection for those enterprises.

The SME regulations can be found here and the 2016 Amendment can be found here.