Micro-loan fund to help jobless get businesses off ground
THE Government will provide 'micro' loans -- ranging from €2,000 to €25,000 -- to help the jobless set up small businesses, the Irish Independent has learnt.
The new micro-finance fund will be announced in the Government's "jobs initiative" package next week.
It will provide loans to people who are struggling to get money from the banks to fund their new ideas.
Enterprise Minister Richard Bruton is finalising details of the plan with Taoiseach Enda Kenny and Finance Minister Michael Noonan ahead of the jobs initiative -- which is expected to be announced in the Dail next Tuesday.
A source close to Mr Bruton last night said any recovery would be driven in part by new businesses set up during the recession -- and said the micro-finance fund would help them to get going.
"We hope that it will have a significant impact on allowing people to start up business. We think they will make a crucial contribution to recovery," the source said.
The fund will aim to take a stake in the enterprise being created -- so some of the gains from successful start-ups can go back into the fund to help support more entrepreneurs.
The micro-finance fund is due to reach €100m during the lifetime of the Government, but the initial funding injection has not yet been agreed.
It will be accompanied by the announcement of a partial loan guarantee scheme --which will see the Government go guarantor on loans for viable businesses.
The source said Mr Bruton was keen to come up with measures to restore lending for businesses.
"Enterprise lending suffered during the property boom. This is another attempt to address that market failure," he said.
The micro-enterprise scheme was welcomed by the Small Firms Association last night.
Director Patricia Callan said that any initiatives around funding for start-ups were very positive.
"The enterprise boards are already doing this to a certain degree, but the problem is that the money runs out very quickly."
One body being considered as a possible administrator of the micro-finance fund is the non-profit group First Step.
It was set up in 1991 by businesswoman Norma Smurfit to fund entrepreneurs who were refused loans by banks. It has since assisted 1,500 projects and helped created 3,000 jobs.