Ireland Strategic Investment Fund to boost SME loans
It is the first time that the fund has taken a stake in a non-bank lender.
Set up 14 years ago by Billy Kane, who once headed up Permanent TSB, Finance Ireland also advances loans to the agriculture, motor, and commercial property firms, and to borrowers.
It said that it is on course to provide over €300m in new lending in 2016, but expects that the new funding will lead to a substantial amount of new loans becoming available in years to come.
A spokesman said that the cost of its current lending to SMEs was at 5.5%, and up to 8%.
Any new competition in the loans market will be welcomed by Irish SMEs.
Central Bank surveys consistently show that Irish SMEs pay among the highest rates for their loans in the eurozone.
This is despite ECB monetary easing having led to large falls in key funding rates to record low levels.
“This significant investment by ISIF underpins our very ambitious growth plans for the coming years,” Mr Kane said.
“Our mission is to create a major non-bank lender in the Irish financial landscape, offering customers a real alternative to the traditional banking sector, and we are well on the way to achieving that.”
“ISIF was attracted by the opportunity to support an established and experienced management team to expand its non-bank platform and in particular grow its SME and agri-leasing businesses,” said Eugene O’Callaghan, ISIF director.
“This investment complements the products provided by other non-bank platforms in the SME sector that ISIF has supported.”
Finance Ireland and Rabobank already work with ISIF with its MilkFlex Fund, which provides low-cost loans to Glanbia Co-Op Society.
It said that MilkFlex was “the first fund of its kind to offer Irish farmers access to flexible, low-interest loans”.
For its existing loans to SMEs, the lender said it requires a business plan outlining an overview of the business, management, markets, and historic and forecast financial information.
It said it aims to make a decision in five business days on loan applications.
