Vincent & Beatty: New SME Regulations02/21/2017

The Code of Conduct for Business Lending to Small and Medium Enterprises (SME) has been amended and replaced by the Central Bank (Supervision and Enforcement) Act 2013 (section 48) (Lending to Small and Medium-Sized Enterprises) Regulations 2015 (Regulations).

The Regulations will apply to all business lending by regulated entities (except credit unions) from 1 July 2016. They will also apply to credit unions from 1 January 2017. The Regulations distinguish between small and micro enterprises and medium-sized enterprises, with greater protection being afforded to the former. The Regulations define small and micro enterprises as those with up to 50 employees and an annual turnover or balance sheet of up to €10,000,000. Medium-sized enterprises are defined as those with up to 250 employees and an annual turnover of €50,000,000 or a balance sheet of up to €43,000,000. One of the most noted changes that the Regulations have introduced is the requirement that the SME have an annual turnover or balance sheet below these thresholds, whereas previously they had to have both.

The Regulations also introduce the requirement for a regulated entity to have a point of contact within the entity for enquires to be made by an SME regarding lending. The entity will need to outline at the application stage the documents and information the SME will need to support its application.