Ireland: Central Bank Regulations Regarding Lending To Small And Medium Sized Enterprises

Last Updated: 21 January 2016
Article by Keith Robinson

Most Read Contributor in Ireland, July 2017


The Central Bank of Ireland (the "Central Bank") has recently issued the Central Bank (Supervision and Enforcement) Act 2013 (Section 48) (Lending to Small and Medium Sized Enterprises) Regulations 2015 (the "Regulations"). The purpose of the Regulations is to bolster the protections for small and medium sized enterprises ("SME"s) when borrowing from regulated financial service providers ("Regulated Lenders") which are providing credit to or entering into alternative arrangements (explained below) with SMEs. The Regulations become operational on 1 July 2016 for regulated entities other than Credit Unions for whom 1 July 2017 is the operative date.

Brief Overview

Part 1 of the Regulations contains preliminary and general provisions; Part 2 of the Regulations details provisions applicable to micro and small enterprises and Part 3 of the Regulations deals with medium sized enterprises. A micro and small enterprise is an enterprise which employs fewer than 50 persons and which has an annual turnover and an annual balance sheet total which does not exceed €10,000,000 (a "Micro Enterprise"). A medium sized enterprise is an enterprise which employs fewer than 250 persons and which has an annual turnover not exceeding €50,000,000 and an annual balance sheet total not exceeding €43,000,000 and which is not a Micro Enterprise. The Regulations will oblige Regulated Lenders to ensure that their internal systems are calibrated to meet the requirements of the Regulations when lending to applicable SME borrowers.

While there is a significant degree of overlap between Parts 2 and 3 of the Regulations, Micro Enterprises have materially more protection than medium sized enterprises. This additional protection will result in an important distinction for Regulated Lenders when developing their internal systems to ensure compliance with the Regulations.

Micro Enterprises

The provisions relating to unsolicited credit (Regulation 7), specialist training for staff when lending to Micro Enterprises (Regulation 8) and advertising (Regulation 11) are particular to Micro Enterprises. Additionally, materially more information must be provided to Micro Enterprises prior to and as part of their application for (and provision of) of credit than is required for medium sized enterprises.

Information Requirements

When entering into a credit facility with a borrower, a Regulated Lender is obliged to provide the borrower with information regarding the facility including the total amount of the credit, the duration of the credit facility agreement, details of fees, charges and interest rate including an explanation of the basis for calculation of the interest charge. The nature and extent of the detail to be provided is augmented in the case of Micro Enterprises. A Regulated Lender is obliged to include warnings, amongst other things, set out in the Regulations in the credit information provided by it to SME borrowers.

A Regulated Lender is obliged to publish on its website and generally to make available to SME borrowers certain information regarding the application process for credit, including the timelines that apply to an assessment of the credit application. In the case of Micro Enterprises, prior to entering a credit agreement, a Regulated Lender is obliged to gather sufficient information to enable it assess whether the credit being applied for is suitable for the relevant borrower.

Security is often required to support the payment obligations of a borrower, including SME borrowers. Where a Regulated Lender requires security (including a guarantee) in support of an application for credit, the Regulated Lender is obliged to (i) ensure that any security being sought is reasonable and proportionate having regard to the nature, liquidity and value of the security offered and the value of the credit offered and (ii) to provide a written explanation to the SME borrower as to why this security is required and the consequences for such borrower of providing such security.

Ongoing Review

Where credit has been extended to a borrower, Regulated Lenders are required to offer a borrower, on an annual basis, a meeting which shall include credit review comprising a review of the facility and security arrangements and if relevant, any arrangements entered into to deal with a borrower in arrears or in financial difficulty. In the case of Micro Enterprises, the credit review must be completed within a reasonable timeframe, which must be notified to the borrower. On completion of the credit review, the Regulated Lender has, subject to certain exceptions, to advise the relevant Micro Enterprise borrower of the outcome of the review. An equivalent obligation in respect of medium sized enterprises is not specifically provided in the Regulations.


Where a borrower informs a Regulated Lender that it is at risk of going into arrears, the Regulated Lender is obliged to offer the borrower the option of an immediate review of the borrower's credit facility, security and alternative arrangements (if any). If a borrower agrees to the review, the Regulated Lender is obliged to assess the borrower's circumstances and assess whether the provisions of the Regulations regarding borrowers in financial difficulties apply to the particular borrower. Regulated Lenders are required to have policies and procedures with the core objective of assisting a borrower resolving its financial difficulties. A Regulated Lender is also obliged to identify the options available to the Micro Enterprise to address arrears or financial difficulties having regard to the circumstances of the Micro Enterprise.

Not Co-operating

Amongst the information to be provided to Micro Enterprises is a clear explanation of the meaning of "not co-operating" and implications for an applicable borrower of not co-operating including the (i) impact on the Regulated Lender's consideration of an alternative arrangement (explained below); (ii) impact of such classification on the Regulated Lender's consideration and exercise of any legal or contractual rights and (iii) where security is realised an explanation that such borrower (and any guarantor) will remain liable for any outstanding debt. Prior to classifying a Micro Enterprise as not co-operating, the Regulated Lender is obliged to issue a warning letter informing the relevant borrower and any guarantor that the borrower will be classified as not co-operating if it does not perform specific actions (which must be reasonable and proportionate) to enable the Regulated Lender complete an assessment of the borrower's financial circumstances and setting out the timeframe within which any specific actions are to be carried out. The timeframe for performance of specific actions must be at least 20 working days from the date of issue of the warning letter. Where a borrower has been classified as not co-operating, following compliance by the Regulated Lender with the Regulations, the Regulated Lender is obliged to notify the borrower and any guarantor that the borrower has been classified as not co-operating and outline the impact of such classification.

Alternative Arrangements

The Regulations detail the minimum information to be provided to borrowers where an alternative arrangement (i.e. an arrangement with a borrower to modify the terms of the loan) is being offered. This includes the timeframe for the borrower to avail of the offer of the alternative arrangement, details of the revised repayment amounts on the credit facility, the impact on the arrears amount and the operation of the facility and the amount of or determination of any residual debt remaining on the expiry on the alternative arrangement. A Regulated Lender is obliged to inform a borrower, if it decides not to offer an alternative arrangement or if a borrower declines to accept the offer of an alternative arrangement, of the implications for the borrower, of those decisions.


The Regulations place obligations on Regulated Lenders to establish and implement internal appeals process to allow a borrower appeal certain decisions. The Regulations also outline procedures for handling complaints.

General Observations

While the Regulations cover many of the areas addressed in the Code of Conduct for Business Lending to Small and Medium Enterprises (the "SME Code") the Regulations are significantly more prescriptive than the SME Code, in particular for Micro Enterprises. The Regulations establish a robust legislative framework to allow more clarity for SME borrowers when obtaining credit from Regulated Lenders. While Regulated Lenders have time to establish systems to implement the measure promulgated by the Regulations, the practical implementation of and compliance with the Regulations may create challenges for Regulated Lenders.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.