“SMEs are the lifeblood of the Irish economy and we are here to support them”

As the Strategic Banking Corporation of Ireland celebrates its 10th anniversary, Chief Executive June Butler, FCA, tells us about its evolution and the outlook for SMEs today

The Strategic Banking Corporation of Ireland (SBCI) was established in 2014 following Ireland’s exit from the EU-IMF programme, which was initiated to support the Irish economy due to the onset of the global financial crisis in 2008. Launched formally on 31 October 2014 by the Department of Finance and the National Treasury Management Agency, the aim of the SBCI at the outset was to ensure businesses could access funding where the private sector could not provide it. Today, the SBCI aims to help Ireland’s SMEs continue to grow, innovate and prosper. June Butler, FCA, was appointed Chief Executive of the SBCI in September 2021. 

Tell us about the SBCI, what it does and how it has evolved over the last decade? 

Starting out in 2014, the purpose of the SBCI was three-fold: to make access to finance easier for SMEs; bring down the cost of borrowing; and increase competition in the market, giving businesses more finance options.

We have really evolved from our initial start-up phase as a provider of low-cost funding to On-Lending Partners to become a promoter and distributor of risk-sharing lending products that meet SMEs’ current financing needs.

One of our key strengths is our ability to act as a conduit for EU-wide supports and bring them to the Irish market for the benefit of SMEs here.

We have been successful in promoting competition in the SME financing market, by supporting new entrants and helping non-bank lenders diversify their product offering.

We now have close to 40 On-Lending Partners, ranging in size from the main banks to smaller providers and Credit Unions.

We provide our partners with low-cost funding and, because we can access lower-cost funding from a variety of sources, we can pass this benefit on to them, and they can then pass it onto their SME clients by way of reduced interest rates.

Since the SBCI was first established in 2014, we have channelled more than €4 billion in low-cost flexible funding to over 60,000 SMEs in Ireland.

You also offer risk-sharing guarantee schemes – how do they work in practical terms?

Our business model has expanded from purely providing low-cost liquidity and wholesale funding at the outset to now offering risk-sharing schemes. 

We do this in partnership with Government departments, which also provide funding for these schemes, alongside the banks, non-banks and Credit Unions that distribute them. 

We have introduced several risk-sharing guarantee schemes, whereby we share the credit risk with the lender. The key benefit here is the availability of lower-cost and longer-term loans for businesses. 

Our risk-sharing schemes also reduce the need for security for businesses, which helps more of them access loans because it reduces a “blocker” they might otherwise have faced when seeking finance.

We access counter-guarantees from either the European Investment Bank (EIB) or the European Investment Fund. We structure this into a guarantee-type product whereby we provide an 80 percent guarantee to both bank and non-bank lenders. This means they can then provide better funding access to SMEs.

Can you tell us about some of the loan schemes you have launched in recent years?

In more recent years, I think we have been instrumental in responding to various crises that have limited the availability of credit to businesses in Ireland.

Where there is uncertainty, the availability of credit tends to tighten up and our role here is counter-cyclical: we step in to provide guarantee schemes to make sure that credit continues to flow to businesses.

We launched the Brexit Loan Scheme in March 2018, for example, in partnership with the Department of Enterprise, Trade and Employment and the Department of Agriculture, Food and the Marine.

It was a €300 million scheme aimed at helping SMEs implement necessary changes to address the challenges posed by Brexit.

We offered an 80 percent guarantee and that scheme was supported by the InnovFin SME Guarantee Facility, with financial backing from the EU under Horizon 2020 Financial Instruments.

We launched the Ukraine Credit Guarantee Scheme in January 2023 – again, in partnership with the Department of Enterprise, Trade and Employment and the Department of Agriculture, Food and the Marine.

That scheme facilitated the provision of working capital and medium-term investment finance to businesses adversely affected by the conflict in Ukraine, facing supply chain disruptions and increased input costs.

Other examples include the Covid-19 Working Capital Loan Scheme, launched in March 2020, and our Covid-19 Credit Guarantee Scheme, which offered an 80 percent guarantee to participating lenders for SME loans.

If you look back to the pandemic and its impact on everyone, including SMEs, there was so much uncertainty in the economy at that time. 

Many businesses had to close their doors, but they still needed working capital. There were businesses that spotted opportunities to expand or take advantage of opportunities that arose. That is where we were able to step in with a State-backed guarantee scheme. 

The reactive aspect of our role in supporting SMEs and the wider economy is very important. When there is a crisis, and the flow of credit slows, we can step in, make sure the flow of business funding continues, and encourage lenders to provide it.

We also take a more strategic view of gaps in the market. Our Growth and Sustainability Loan Scheme, for example, supports SMEs, including farmers and fishers, investing in growth, resilience and climate action. It has been designed to encourage longer-term strategic investment.

The SBCI has more recently moved into consumer lending. Can you tell us more about this?

Just this year, we have evolved into providing a consumer lending product for the first time, launching a new low-cost Home Energy Upgrade Loan Scheme. The €500 million scheme is designed to help homeowners invest in energy efficiency. 

They can borrow between €5,000 and €75,000 on an unsecured basis for a term of up to 10 years, availing of interest rates significantly lower than those available elsewhere in the market.

We worked with the Department of the Environment, Climate and Communications on this scheme, which is underpinned by a loan guarantee from the EIB Group and a Government-funded interest rate subsidy. It is the first scheme of its kind for both Ireland and the EIB Group. 

Our aim here is to address a gap in the consumer lending market and help promote Ireland’s energy transition by providing low-cost finance for homeowners who want to retrofit their properties to help with both energy efficiency and decarbonisation. 

We have also just launched a new Green Transition Finance product for Irish businesses in partnership with Business Venture Partners.

It is a €50 million debt fund to support Irish businesses investing in sustainable and green projects and assets, as well as those already operating in a sustainable manner.
The loans on offer under this scheme range from €500,000 to €5 million for terms up to 10 years, with competitive interest rates and flexible repayment terms.

What is your take on the outlook for SMEs in Ireland today, 10 years after the SBCI was launched?

 It is a tale of two halves. On one side, there are a lot of opportunities out there for businesses to explore right now in areas such as digital transformation.

Lots of businesses came a long way on this front during the pandemic, when we were working remotely and connecting and doing business online. During that period, we saw investment in things like e-commerce platforms and digital marketing, but there is still quite a way to go. 

Digital tools and technologies can really help businesses with customer engagement and efficiency through investment in automated manufacturing and back-office functions, for example. 

The second opportunity I would highlight for SMEs relates to sustainability. We are seeing that the SMEs investing in sustainability – be it solar panels, heat pumps or retrofitting their offices – are absolutely reducing costs.

This kind of investment has a direct impact on the bottom line, and it is attractive to consumers who are increasingly prioritising green credentials when they choose products and services.

The third opportunity for SMEs lies in export markets. We are seeing a lot of smaller businesses looking to identify new revenue streams and they often lie in markets outside Ireland.

On the flipside, SMEs in 2024 are facing the challenges of labour market pressures, rising input costs and inflation. All these factors create pressure.

The banking landscape has change significantly in the past five years, with the exit of KBC and Ulster Bank from the Irish market impacting the availability of finance. 

We have worked hard to establish partnerships with more non-bank finance providers, such as Finance Ireland, Fexco and Linked Finance, so SMEs can have more access to alternative finance options.

We are also focusing on Credit Union partnerships. Credit Unions have a national footprint, they are known and trusted in their local communities, and they are now developing into providers of SME finance, which we welcome.

The need to focus on attracting new finance entrants, and helping existing players expand their product offering, is important to us at the SBCI. 

Talk us through your own career path as a Chartered Accountant prior to taking up your current role with the SBCI.

I studied law at Trinity College Dublin and, after that, trained as a Chartered Accountant with PwC. When I left practice in 2003, I joined Bank of Ireland. I started in the Group Internal Audit division and then spent many years in finance in a variety of roles.

My last role with Bank of Ireland was in the Business Banking division and it was at that stage that I really developed a passion for working with Irish businesses. 

I got to know them. I got to see how driven and innovative they are, so I was honoured when the board of the SBCI selected me for this role, which is also focused on serving Irish businesses, just from a different angle.

What do you enjoy most about your role as Chief Executive of the SBCI?

I really enjoy working with Irish businesses and feeling like we are genuinely making a difference, because our role is to fill the finance gaps for SMEs and make it easier for businesses to access funding for a whole range of reasons, be it working capital or finance for expansion or exporting into new markets.

Every day, we see the benefit of what we are doing. We often hear that SMEs are the lifeblood of the Irish economy, and they really are. They provide significant employment, contribute to their communities and the whole team at the SBCI feels like we are making a difference to this critical sector every day.

The part of my job I enjoy most is meeting the people we are helping – be they businesses owners, farmers or fishers – and hearing about the positive impact of what we do. We support a broad cross-section of the SME sector.