Bank of Ireland has become the first lender to offer loans under the Government's €1.2bn Ukraine Credit Guarantee Scheme.

Announced in the budget, the scheme offers liquidity to firms who have been adversely impacted by the effects of the Ukraine war and need funding urgently to meet increased expenses.

It is aimed primarily at SMEs, small mid-caps with up to 499 employees and primary producers.

"This Scheme will provide additional support and financial flexibility for businesses suffering from rapidly rising costs as a consequence of Russia’s invasion of Ukraine," said CEO of Bank of Ireland, Myles O’Grady.

To qualify borrowers’ have to declare that their costs have risen by a minimum of 10% on their 2020 figures.

They also have to prove that the loan is being sought specifically as a result of difficulties being experienced due to the Ukraine crisis.

The interest rates on offer will be lower than standard market rates and the State will guarantee 80% of the loan with the lenders retaining 20% of the risk.

Loans can be between €10,000 and €1m in total and can include overdrafts, working capital and term loan facilities.

No personal guarantee or collateral will be required for loans up to €250,000.

The loans can be for terms of up to six years in duration and the scheme will run until December 31st of next year.

Businesses first have to determine if they are eligible through the Strategic Banking Corporation of Ireland (SBCI) hub.

"We believe that businesses, including farmers and fishers, will benefit from having access to this additional financial support, to fund their working capital and investment needs," said June Butler, CEO of the SBCI.

"The provision of unsecured loans of up to €250,000, together with the reduction in applicable interest rates, makes the Scheme a viable option for borrowers."

The development has been welcomed by the ministers for Finance, Enterprise, and Agriculture.