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Great business if they can get credit

THE "partial loans guarantee scheme" announced by Enterprise Minister Richard Bruton represents a start, if only a start, on addressing one of the problems that plague Irish business in general and imaginative would-be entrepreneurs in particular.

It will be discussed by the Cabinet today, and will presumably be approved quickly. Similar arrangements already exist in most of our competitor countries, and Ireland should not lag behind them any longer.

Under the three-year scheme, the Government will guarantee 70pc of the capital for small start-up businesses that at present do not qualify for bank loans. The risk will be shared by the State, lenders and borrowers. Strict control of the operation of the guarantees is promised.

The Government calculates that the operation of the scheme will cost only €500,000 in the first year and €12m a year thereafter. This expenditure is remarkably small, given that the aim is to generate €1.2bn in lending to 13,000 small businesses, create 25,500 jobs, and bring a return to the Exchequer of more than €300m.

Even if there must be some doubt that these targets will be reached, the announcement is welcome for several reasons.

It shows that the Fine Gael-Labour coalition has fulfilled a part of its promise to get down to serious business without delay. It gives a new generation of entrepreneurs hope that they can raise money to establish enterprises at home instead of having to emigrate.

The sums in question, and the possible gains, may be small by comparison with the massive hole in the public finances and the far larger bills that hang over the taxpayers as a result of the banking meltdown. But they will tangibly increase the flow of credit from the banks to people who want to put it to useful purposes.

The banks themselves should take some lessons on board. When they are restructured, they need to change their lending practices in more ways than one. They have to learn a great deal more about the nature of enterprise in the age of technological revolution, and the requirements of those who engage in it.

As to the Government, it must follow up this initiative with its "jobs budget", and with other measures designed to help create sustainable employment, during its first 100 days in office. None of them will turn the fight to save the economy into anything other than a desperate struggle. But every little helps.

Irish Independent