Friday, June 22 11:27:10
Over E900 million 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 announced made the announcement today as the Microenterprise Loan Fund Bill was published following Government decision last Tuesday.
The Microenterprise Loan Fund Scheme, which is expected to be operational from early autumn, will initially facilitate E40million 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 E50million of lending over a further five years at that point. Start-ups, sole traders and existing microenterprises will be eligible to apply for a loan under the scheme.
The scheme 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.
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 and, in the initial 5-year phase, E10million of Exchequer funding will be leveraged to achieve a total of E40million in additional lending.
In the first phase, more than 2700 microenterprises are expected to benefit from the scheme with the creation of 3,800 jobs.
Loans of up to E25,000 will be provided, and the average loan is expected to be E16,000.
An application will be made by Microfinance Ireland to the European Investment Fund for a guarantee to help optimise the State's investment.
CEBs/LEOs will actively engage with applicants in the development of business propositions and 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 E150million 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. There will be a E125million 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.
"Employment is this Government'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," the Minister said.
"The 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."