Mr. John Trethowan:

Every new source of finance has to be welcomed, whether it will be significant or not any player in the market will be welcomed. One area that could be helpful, but it does carry a bit of a historical stigma, is the old debtor financing or factoring. It comes under a lot of different names such as commercial finance, debtor finance or factoring but it is invoice discounting and what that does is it lends not against the strength of an SME but against the strength of the debtor. That could be Tesco, Dunnes Stores or someone whom one could lend against more easily. Debtor financing could be helpful for a business which might not qualify for bank financing. It could be the answer for a growing business. It is a bit more expensive but the access to cash or capital would be helpful for them.

On non-bank funding, the NPRF funds are welcome. The work the Department of Finance is doing in non-bank funding to try to access new sources of finance will be helpful as well. The challenge is that given the size of the businesses which predominate in the SME market – we have 200,000 SMEs but 90% of them employ less than ten people. The amounts they need to borrow are a lot less than equity finance would require so it is a matter of trying to find some method to salami slice the credit that becomes useful for that size of business as well.

On the loan guarantee scheme, part of the team has been looking at reinvigorating the scheme. We could see where it did not work from when we were trying to find solutions to specific SME problems. We brought them to them to the attention of the Department of Jobs, Enterprise and Innovation and it has taken them on board. Everyone is learning on all of these things and I hope the next phase will address much of what has been learnt from the first wave.

The microfinance scheme is proving very helpful for start-ups and for some small businesses, even in terms of producing part of the stake. If the banks are unhappy with the level of gearing and the stake, sometimes if Microfinance Ireland is involved with them it lets them make a loan as well. The sum of €25,000 might be too small an amount. It might need to be increased to €50,000. In addition, the term of the loan could be looked at to lengthen it to make the repayments a bit easier for new businesses as well. The longer the term the less the monthly repayments will be.