Over â‚¬90million in additional lending to 5,500 micro-enterprises will be made available under a Government scheme which is expected to create 7,700 jobs over 10 years, the Minister for Jobs, Enterprise and Innovation Richard Bruton TD announced Friday 22nd June. Minister Bruton was speaking as the Microenterprise Loan Fund Bill.
The Microenterprise Loan Fund Scheme, which is expected to be operational from early autumn, will initially facilitate â‚¬40million in additional lending to businesses employing not more than 10 people over the next five years, with provision for the scheme to be extended to provide an additional â‚¬50million of lending over a further five years at that point.Â Start-ups, sole traders and existing microenterprises will be eligible to apply for a loan under the scheme.
The announcement represents a key step towards the delivery of a major commitment in the Programme for Government and Action Plan for Jobs 2012.
The key features of the scheme include:
- Â It will be operated by Microfinance Ireland, a subsidiary company of Social Finance Foundation, which was founded in 2007 by the Minister for Finance, and has substantial experience in this area
- Businesses, including sole traders, across all sectors employing not more than 10 staff will be eligible for the scheme
- Â In order to be eligible for the scheme, a request for credit must first have been declined by the banks. The Scheme will provide loans for commercially viable proposals that do not meet the conventional risk criteria applied by the banks for various reasons, including the absence of collateral
- The scheme will be demand-led
- In the initial 5-year phase, â‚¬10million of Exchequer funding will be leveraged to achieve a total of â‚¬40million in additional lending
- In the initial 5-year phase, more than 2700 microenterprises are expected to benefit from the scheme with the creation of 3,800 jobs
- Loans of up to â‚¬25,000 will be provided, and the average loan is expected to be â‚¬16,000
- An application will be made by Microfinance Ireland to the European Investment Fund for a guarantee to help optimise the Stateâ€™s investment
- CEBs/LEOs will actively engage with applicants in the development of business propositions
- The Scheme will be closely monitored and will be comprehensively reviewed after two years of operation
The Microenterprise Loan Fund will form part of a suite of finance schemes provided through the Department of Jobs, Enterprise and Innovation to businesses of a range of sizes and in a range of sectors, including:
- The â‚¬150million Credit Guarantee Scheme, for SMEs who because of a lack of collateral or because of the sector they operate in face difficulties in accessing traditional bank credit
- â‚¬125million invested by Enterprise Ireland through Innovation Fund Ireland, targeted at high-growth, high-tech early-stage companies based in Ireland. This investment by the State will leverage significant private sector investment
- The â‚¬150million Development Capital Scheme, aimed at mid-sized, high-growth Irish companies operating in traditional sectors
Making the announcement, Minister Bruton said:
â€śEmployment is this Governmentâ€™s number one priority, and we are determined to continue implementing our plan to rebuild the economy and create the jobs we need. We must create a powerful engine of indigenous enterprise to sustain the employment we need, and a key part of our Action Plan for Jobs is to ensure that we have more businesses establishing, succeeding, expanding, and creating employment. To achieve this, we are implementing a series of changes to make it easier for small businesses to access credit.
â€śThe Microenterprise scheme will ensure that over a ten year period, 5,500 viable businesses which would not otherwise have got access to finance will now be able to access credit, expand, and create an additional 7,700 jobs. People who have a business idea, but lack the capital to get it off the ground, whether they are unemployed or already in a job, will now be able to access the crucial finance that they need. It will also form part of a series of measures aimed at encouraging more people to start a business. I am determined that, with a series of further innovations like this, we can create a strong engine of indigenous business to create and sustain the jobs we need.â€ť
Minister for Small Business, John Perry TD said:
"The ability of small businesses to succeed and grow underpins our future potential for jobs, growth and prosperity.Â With this in mind the Government is committed to supporting our SME sector in every way to develop their businesses, increase exports, create jobs and rebuild the economy. Â
"The Microenterprise Loan Fund Scheme is one key component in a suite of initiatives aimed at ensuring the flow of credit to SMEs to sustain employment and create new jobs.
â€śSmall businesses are currently operating in a particularly difficult environment.Â It is important that we continue to focus on delivering a practical programme of actions that can achieve improvements in the operating environment for small business.
â€śThis fund will supplement normal bank lending.Â It will provide additional lending to start-up, newly established or growing micro-enterprises which have commercially viable proposals but do not meet the conventional risk criteria applied by commercial banksâ€ť.
Please see link to the Microenterprise Loan Fund Bill 2012.