Thursday, 12 July 2012
Enterprise Support Services
Question 3: To ask the Minister for Jobs; Enterprise and Innovation if, in the operation of the microenterprise loan fund scheme, consideration will be given to encouraging viable enterprise in areas of the country currently affected by high levels of unemployment as a priority, or will decisions on grants be based on a demand led approach to viable applications; and if he will make a statement on the matter. [34250/12]
The microenterprise loan fund will facilitate the growth and expansion of all viable microenterprises from all industry sectors across the country that have been refused access to credit from the banks. It is a key element in our Action Plan for Jobs. The fund has a significant entrepreneurship focus to encourage all would-be entrepreneurs across the country who may be unemployed but who have the potential to generate employment for themselves and others. It will not have geographical quotas but will be of particular help to persons who are unemployed who would have much greater difficulty accessing conventional sources of bank lending. It will be promoted through a range of networks across the country, including local bodies that support business start-up for people with fewer resources, and in areas of high unemployment. It will not be confined to businesses with export potential and will be more within the reach of unemployed persons who target business opportunities within their own local communities. It will form an important complementary element and add value to schemes of support, such as the back to work allowance. Support will be in the form of loans, rather than grants.
Loans will be made available to start-up, newly established or growing microenterprises with viable business propositions that do not meet the conventional risk criteria applied by banks. The potential viability of the business proposal will be the dominant factor in all credit decisions. It will ultimately be for enterprises to apply for the loans so it will be demand-led in that sense. It is envisaged that mentoring will be an important element in the success of the fund. Delivery of business supports including business planning and mentoring to facilitate successful credit applications will be facilitated through the national network of existing bodies and agencies. The county and city enterprise boards are often the first port of call for business support and advice, and they will be actively involved in the promotion of the microfinance fund across the country.
The Minister answered the question of whether the fund will be targeted. Clearly, it will be down to the banks. They could delay people very significantly, because people must be turned down by the banks before they can apply to the microenterprise loan fund. However, other issues come into play as well if this is going to work. One of them is the provision of incubator units, particularly if something will be manufactured in the enterprise as opposed to something done on the Internet or whatever. I can give the Minister an example. I met somebody recently who is in the hobby sector and is seeking to get onto the back to work allowance scheme. He was going to try to manufacture in a small shed in his back garden, so we went through the detail of what that involved. He did not qualify for a grant because he would have to get planning permission, and he could not get planning permission on that site because it is in a housing estate. All these issues come into play. If he did have planning permission, he was faced with commercial rates and development contributions with the application for planning permission. In the absence of a suite of measures such as a proactive approach to the provision of incubator units this fund might not be capable of being leveraged by people who have viable ideas.
The scheme is currently being finalised and will be laid before the Houses of the Oireachtas. The Deputy refers to a unique case. There is a code of practice in the scheme whereby a decision must be made within two weeks or 15 days - I will have to check the exact timeframe. The core principle of the microenterprise loan fund is that even in good economic circumstances the risk criteria might not be met by a certain coterie of people, such as the person to whom the Deputy referred. They might be credit-worthy but they do not fit within the banking criteria. The fund is designed for people in that position. Given that the local bodies will then feed into that process, one hopes there will be a fit solution for such people so they will not have to incur massive administrative costs to be able to access the fund so they can start their businesses.
I was using that person as an example. I believe incubator units are required, so perhaps the Minister will consider that. Has the Minister set a time to conduct an evaluation once the scheme is up and running? It will be important to keep an eye on what the banks are doing in the context of this scheme.