AIB is to make €100 million available to small and medium sized businesses prepared to invest in projects that will save on energy costs.
The SME fund will offer discounted loan rates supported by the European Investment Bank for borrowings of up to €300,000. This will reduce the interest rate on the loan to 5.25 per cent compared with AIB’s standard variable business loan rate of 6.5 per cent. The funds will be available from early 2014.
AIB’s move follows a telephone survey of 451 SMEs conducted on its behalf by Amárach Research up to October 2013 that found that the average SME spends about €5,500 per month on energy costs, excluding transport.
The research, which focused on manufacturing and retail, found that cpost rose to an average of €9,500 for manufacturers and falls to €4,100 for retailers.
On average, energy consumes 9 per cent of SME’s operating costs. This ranges from an average of 7 per cent for manufacturers and 11 per cent for retailers.
The survey shows that many SMEs are not able to distinguish between difference sources of energy costs with only 21 per cent able to fully quantify their lighting costs.
One in seven SMEs expected to seek bank finance to fund an energy projects in the 12 months, with the majority needing less than €25,000.
"We want to be the leading bank in Ireland for SME's funding their energy efficiency projects," said AIB's director of personal, business and corporate banking Bernard Byrne.
“It is also clear that the economic downturn has prompted businesses to focus on energy savings as a way of cutting costs when revenue growth is slow. On the broader canvas, that in turn should help Ireland achieve its 2020 targets of reducing energy consumption by 20 per cent by 2020.”
