Damien English (Meath West, Fine Gael) | Oireachtas source

On my reference to start-ups, in general microfinance loans are available to start-ups. They were mentioned by other Deputies and I do not suggest that all the demand in recent months has been from start-ups. Of course it has not been; it has been from businesses that want to reopen, survive and thrive. The loan is also available to the many microenterprises. There will be people who, for whatever reason during these months because of Covid-19, might have to change job category or sector. The job they had for life might not exist because we do not know whether every sector will fully recover. It is important, therefore, that money is available to those people who might want to switch their efforts, move over and start a new company or microenterprise. That is what this money is for and it is important that in every debate on the matter, we get the message out that money is available to start-ups. Some high-risk start-ups might have no certainty of where their customer base will be and that will be another use for this money.

The Deputy has proposed an amendment that would provide for a longer interest-free period and lower interest rates. This is something that any sane person would naturally want to consider or achieve. That does not mean it will be possible but, certainly, when developing a new scheme under the Bill, we will consider it. I will honour that commitment to meeting the Deputy to discuss that because we are conscious of the support from all sides of the House for achieving lower interest rates and longer repayment breaks. We have responded to that by putting in place a lower interest rate. It was traditionally 7% or 8% but has now been cut to 4.5% There is a six-month break that did not always exist, meaning there is now an effective rate of 3%, which is quite manageable for most businesses.

Nevertheless, businesses need access to as much as they can get through these times. While we will work with the sector on that, we have been advised by the Office of the Attorney General that it would not be legally sound to legislate for the details of the scheme in primary legislation, which is the point I was trying to make earlier. It is a matter for secondary legislation and regulation as we bring the scheme forward in the weeks ahead. The Government will have to oppose the amendment because the Bill is not the place to make that provision, although I understand the intention, which is probably supported from all sides of the House. Given the strong cause of support for the amendment from many Deputies, I will certainly keep the Deputy's proposal in mind and engage with her on that when developing the new scheme under the Bill if it is passed by the Houses.

In case there is a little misunderstanding about this loan offering or tool, I reiterate that the loan in question is not administered through the banking sector. It is through Microfinance Ireland, as a non-profit bank. The Deputy referred again to the traditional banking sector but that does not apply in this case. The loans are not granted through banks that might make profits for other reasons. That is not what this is about. It is a not-for-profit bank. For this kind of money, I accept that many different applications are coming through from businesses that are quite sound and just need a little help, which is what we are trying to do, but traditionally the microfinance loan is about funding new start-ups that do not have a history to base their credit rating on or businesses that are finding it difficult to access money. It is generally a high-risk category associated with quite high losses, which the taxpayer funds. That is our job and we are happy to foster the opportunity to create jobs.

This kind of money is usually very expensive. In many sectors, this could be money with an interest rate of 14% or 15%, and we are making it available already at 4.5%. It was traditionally a 7% or 8% rate, reduced to 4.5% and effectively 3%, but we will re-examine that. To be fair to Microfinance Ireland, the loans are not for profit, even though there has been a perception from some contributors in the House in recent days that they are. I accept that other loan offerings and measures we offer are administered through the banks but this is not. That is why, in this case, it is not appropriate to put into primary legislation what the amendment seeks to provide for, but we will work with people on the matter in the weeks ahead.

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