State under fire for not accessing EU fund for firms

The Government has been criticised for failing to access an EU facility dedicated to helping small businesses and the unemployed.

Several EU states have taken advantage of the facility but Ireland — despite its unemployment crisis — is not one of them.

Sinn Féin jobs spokesman Peadar Toibín said it was “shocking” that the Coalition had not yet sought to tap the facility given the “epidemic level of business closure” here.

The European progress microfinance facility was launched in 2010 to increase the availability of micro-credit — or loans below €25,000 — for setting up or developing a small business.

It does not directly finance the businesses, but provides funds and guarantees to banks and other micro-credit providers so they can increase lending to such enterprises.

The facility is specifically aimed at those who:

* Want to become self-employed or set up or develop a business with fewer than 10 employees.

* Are unemployed.

* Have taken time out of the labour market.

* Have difficulty getting conventional credit because of gender, age, ethnicity or disability.

The micro-credit providers can be private or public banks, non-bank microfinance institutions and not-for-profit organisations.

They can apply directly to the facility, meaning State involvement is not required. However, Mr Toibin said the Government should be driving applications considering how much the State owns of the banking sector.

“There are 180,000 micro-businesses employing 10 people or less in this State,” he said.

“This sector, more so than any other, is collapsing due to the evaporation of demand, rigid cost structures and the glacial flow of credit into the system.

“I have contacted the [facility] and have been informed that 11 countries have drawn down funds so far but Ireland is not one of them.

“This is a shocking situation given the epidemic level of business closure, the near-500,000 people unemployed and the 70,000 people leaving the State last year.”

Mr Toibín raised the issue several times in the Dáil this week. In response, the junior minister at the Department of Enterprise, John Perry, said work was continuing on the development of a national microfinance loan fund for small businesses.

He said the Government had already held discussions with the body overseeing the European facility about accessing that to help fund the national scheme.

“I am developing the structure of the microfinance facility to be established early this year. The matter will be pursued further with the European Investment Fund [the body overseeing the European facility] at that stage,” said Mr Perry.