Written answers
Tuesday, 31 January 2012
Department of Enterprise, Trade and Innovation
Small and Medium Enterprises
9:00 pm
Willie Penrose (Longford-Westmeath, Labour)
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Question 305: To ask the Minister for Jobs, Enterprise and Innovation if he will outline in detail the funding that will be available from the micro-enterprise fund for small business; the way it will be evaluated and allocated; if an agreement has been reached with the banking sector to provide much needed finance and credit for small businesses; and if he will make a statement on the matter. [5570/12]
Richard Bruton (Dublin North Central, Fine Gael)
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I am developing a Microfinance Loan Fund to provide loans to the microenterprise sector. It is targeted at start-up, newly established, or growing micro enterprises across all industry sectors, employing not more than 10 people. This Fund will provide loans of up to €25,000 for commercially viable proposals that do not meet the conventional risk criteria applied by commercial banks.
The proposed delivery structure of the Microfinance Loan Fund is being designed in close consultation with the Department of Finance, and is being progressed as a matter of urgency.
The Government recently approved the allocation of €10 million as seed capital for the Fund. It is anticipated that the Fund will supplement this seed capital by leveraging further funding from private sources, including the banks.
With regard to banks providing credit to small businesses, the initiatives taken by the Minister for Finance in March 2011 to reorganise, recapitalise and deleverage the domestic financial system is the principal response to restore the banks to health and provide credit to business.
The Government imposed lending targets on the two domestic pillar banks for the three calendar years, 2011 to 2013. Both banks were required to sanction lending of at least €3 billion in 2011, €3.5 billion this year and €4 billion in 2013 for new or increased credit facilities to SMEs. Each bank has informed the Department of Finance that they expect to have met their lending targets for 2011.
David Mullins
Posted on 14 Feb 2012 12:09 pm (Report this comment)
The European Progress Microfinance Facility is a microfinance initiative established in March 2010 with EUR 200 million of funding from the European Commission and the European Investment Bank.
European Investment Fund and Microfinance consists mainly of micro-loans (less than EUR 25,000) tailored to micro-enterprises (91% of all European businesses) and people who would like to become self-employed but are facing difficulties in accessing the traditional banking services.
In EU 99% of all start-ups are micro or small enterprises and over 30% are launched by unemployed people. What new policy initiative can supersede the existing EIF scheme and how can this be delivered without going through the same failed banking system?
It is unreasonable to ask high interest rates when the majority of the risks by the 'lender's stake' is guaranteed. Does the state or EU pay for risk, investment or security?
Low interest, high risk is unique. High interest and low risk is unreasonable from the States perspective.
Other options include minimizing the 70% startup failures in startup phases. These failure are mainly due to poor support mechanism for micro-entreprises and cash flow management.
I propose a new scheme for innovative entrepreneurs that is supported by seasoned entrepreneurial investors in a mentorship program for early stage startups, called BEGIN...Business Entrepreneurial Grant Investment Network. Microfinance with mentorship and VC positioning for growth.