Up to 90% in extra loans for start-ups

The Government says itsincoming micro-enterprise loan fund scheme — aimed at improving lending facilities to start-up firms — will boost available credit by over €90m and create nearly 8,000 jobs over the coming 10 years.

The fund — one of two initiatives aimed at providing extra credit — is to be managed and operated by Microfinance Ireland, a subsidiary of the Social Finance Foundation.

It will be open to firms who have been turned down for funding by the banks. Along with the temporary loan guarantee scheme, it is set to become available in September.

The scheme will be open to companies with fewer than 10 employees and will initially facilitate €40m in additional lending over the next five years.

The scheme can be extended, to provide an additional €50m lending over the following five years. Over the entire 10-year planned period of the scheme, the Government anticipates 5,500 businesses being aided and 7,700 jobs being created as a result.

Forming part of the Government’s action plan for jobs, the fund — according to Jobs Minister Richard Bruton — shows that employment “is this Government’s No 1 priority”.

“People who have a business idea, but lack the capital to get it off the ground — whether they’re 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.”

Yesterday’s announcement received a broad welcome across industry representatives.

According to Chambers Ireland’s deputy CEO Sean Murphy: “If it is coupled with better guidelines and more certainty on accessing the seed capital scheme, then it can help to support start-ups in their early stage development.

“The Government has made a number of welcome announcements regarding supports for business, what we need now is a resolute focus on delivery. This scheme needs to be activated as soon as possible.”

Small firms’ lobby group Isme said that while the fund will not be the “silver bullet” that credit-hungry firms are looking for, it would provide a “huge difference” for start-ups and micro-enterprises.

However, its CEO, Mark Fielding, bemoaned the amount of time it had taken for the scheme to go from planning stage to actual implementation.

The Small Firms Association — the annual conference of which highlighted access to capital as a key priority — said jobs should be saved and created on the back of this; but also called on Government to give potential entrepreneurs a “social insurance safety net”, via them having the same entitlements as employees.

“It will also be vital in encouraging many people who are currently on the live register to take the risk and become self-employed or set up small businesses, as they will now have a more realistic chance of accessing vital start-up funds,” said SFA director Patricia Callan.