Peer-to-peer lender Linked Finance has said that alternative lenders should be included alongside the pillar banks as channels for the expansion of the Government's lending support for SMEs amid the Covid-19 crisis.

Linked Finance said it is vital to ensure funding is deployed rapidly, and this will be helped by leveraging the strong SME relationships held by several non-bank lenders. 

It said that while the Government's existing Capital Guarantee and Covid-19 Working Capital Schemes is well-intentioned, it is just not delivering at the scale required. 

Figures from the Department of Business, Enterprise and Innovation showed that by the end of last week only €11m of the €200m first tranche allocated under the Covid-19 Working Capital Scheme had been awarded to companies.

Just 56 companies have had loans approved over the seven weeks since its launch on March 10, the figures also showed. 

Linked Finance's Chairman Michael Cawley this week wrote to the Minister for Finance Paschal Donohoe to outline the company's concerns and request a meeting to discuss how SME lending supports can be improved.

"Linked Finance believes the current approach is not working because on the demand side, the administrative burden required of firms to qualify is excessive. On the supply side, the extent of Government guarantees is insufficient for lenders to be willing to deploy capital given the extent of uncertainty out there," the company said.

It noted that the UK government earlier this week announced plans to offer 100% guarantees for emergency loans to SMEs up to £50,000. 

The UK also accredited the peer to peer lender Funding Circle under its Coronavirus Business Interruption Loan Scheme to work alongside the traditional banks to deploy capital.

Linked Finance has worked closely with its existing borrowers since the crisis hit to help them address difficulties.

It has given an automatic two-month payment break for all borrowers in the hospitality sector, as well as three month breaks to borrowers who requested it.

It has also introduced a new "Deferred Start Loan" that allows SMEs to borrow up to €100,000 for 15 months, but with no capital or interest payments in the first three months of the loan.

Niall Dorrian, chief executive of Linked Finance, said it is vital that the Government moves quickly to expand the lending support it can provide. 

"Alongside an expansion of capital guarantees should also be the broadening of the channels through which funds are offered to include lenders like Linked Finance. We have the intimate understanding of, and relationships with, SMEs to ensure that funds are deployed rapidly and to the right place, " Niall Dorrian said. 

He said that governments across Europe are providing much higher levels of support than is available in Ireland, which in the short-term will play a crucial role in getting the wheels of business turning again as those countries emerge from the current lockdown phase of the crisis. 

"Now is the time for a forceful and wide-ranging response to support an SME sector that provides over two thirds of the jobs in our economy," the Linked Finance CEO added.