Tuesday, 21 February 2012
Department of Enterprise, Trade and Innovation
Question 305: To ask the Minister for Jobs, Enterprise and Innovation if any microfinance intermediary has applied to administer the European progress microfinance facility here; and if he will make a statement on the matter. [9328/12]
Question 306: To ask the Minister for Jobs, Enterprise and Innovation if any Irish company may access the European progress microfinance facility through a different country’s intermediary; and if he will make a statement on the matter. [9329/12]
Question 307: To ask the Minister for Jobs, Enterprise and Innovation the progress that has been made on the microfinance start up fund; the date on which it will be operational; and if he will make a statement on the matter. [9330/12]
I propose to take Questions Nos. 305 to 307, inclusive, together.
The European Progress Microfinance Facility is a European Investment Fund (EIF) initiative to support entrepreneurship and employment through microfinance activities. It was established by the EU Commission in 2010.
It does not directly provide microfinance to either Member States’ Governments or entrepreneurs. Instead, following a rigorous due diligence process, selected microfinance providers across the EU who fulfil the requirements are accredited by the EIF and can avail of supports designed to increase lending, into the Microenterprise sector.
Specifically, capped guarantees may be provided to eligible intermediaries partially covering their portfolios of micro-loans, or loan facilities may be availed of to increase lending to micro-enterprises. The guarantees provided are intended to mitigate bad debts incurred in the lending operations. Microfinance providers may apply for the guarantee, or for the loan facility, but may not avail of both. Eligible intermediaries are any public and private institutions that provide microfinance loans and/or guarantees to individuals, or micro-enterprises established in the EU Member States. To apply to become an intermediary, interested institutions must submit a formal application for Progress Microfinance micro-credit guarantee directly to the EIF. Each agreement is negotiated individually and is subject to approval by the European Commission, following due diligence.
Any EU microfinance institution may apply to the EIF under this Facility and State involvement is not a prerequisite. Information on the EU Progress Microfinance Facility is available on the EIF website.
I understand that an existing intermediary in Ireland, First Step, has availed of the Competitiveness and Innovation Programme guarantee scheme under the EIF, which preceded the EU Progress facility.
I am currently finalising the delivery structures for a State-backed Microfinance Loan Fund to provide loans to the microenterprise sector. This Fund is designed to stimulate lending to sustainable microenterprises and is targeted at start-up, newly established, or growing micro enterprises across all industry sectors, employing not more than 10 people. It 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 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.
My Department has had discussions with the EIF to explore the possibilities of access to the Progress Microfinance Facility for the Fund when established. Following establishment of the Microfinance lending facility, application will be made for the EIF guarantee facility. A rigorous due diligence process is required to secure EIF accreditation. Following EIF approval of the guarantee facility, and subject to completion of all administrative and corporate governance requirements, it is anticipated that the Loan Fund will become operational by mid-year.