Thursday 22 March 2018

State scheme sets aside €90m for small firms refused loans

Donal O'Donovan and Mark Keenan

THE Government will bypass its own banks in an effort to lend €90m to small firms, under a new scheme.

The plan is to channel lending to firms with fewer than 10 staff who are being starved of capital because of the absence of bank lending.

The Government hopes to help foster 7,700 new jobs over 10 years through the scheme.

The new loans will only be available to businesses that have seen their loan applications rejected by banks.

Minister for Jobs and Enterprise Richard Bruton said the aim is to help firms that cannot currently access funding from the banks.

Legislation for the new initiative was published this week.

The loans will be operated by Microfinance Ireland, a subsidiary of the Social Finance Foundation -- which is linked to the county enterprise network.

The new scheme comes after the head of the Credit Review Office said he was "disappointed" that there was not more evidence of support for "enterprise risk taking" by the banks. The Credit Review Office was set up to monitor bank lending to business.


The latest fund is one of a series of measures aimed at boosting SMEs (small and medium enterprises).

It includes a €150m credit guarantee scheme for small business loans and financial supports for technology firms and high potential start-ups.

Meanwhile, a new poll among small businesses shows that an unexpectedly high percentage (86pc) of Irish small firms plan to hire new staff or hold onto all their existing staff through the year ahead.

In the most positive survey yet from the Irish business sector, 8pc of companies surveyed at the Small Firms Association's annual conference said they were planning to hire "a significantly greater number" of staff, 35pc said they planned to increase staff numbers "to some degree" in the coming year, while 43pc of those attending the conference said they planned to keep the same numbers of staff.

On the downside, 11pc said they would be cutting back to some degree and 3pc said they would be cutting by a "significant degree".

Some 47pc of firms said they intended expanding their operations in the year ahead, 43pc said they planned to maintain the size of their companies, while 10pc said they would be downsizing.

The survey was conducted among the almost 300 firms attending the SMA's conference held in Dublin during the week.

According to the SMA, there was a strong showing by relatively large firms -- almost 17pc of those in attendance employed more than 50 people and more than half had been in business for more than 20 years.

When those who were not hiring were asked for the reasons why, less than half (46pc) said it was because they didn't have enough business to do so. A high 33pc said it was for reasons of cost, 10pc cited employment law as being the reason and 9pc cited skills issues such as shortages.

The Small Firms Association represents more than 8,000 Irish companies.

Irish Independent

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