Emer Higgins (Dublin Mid West, Fine Gael)
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462. To ask the Minister for Jobs, Enterprise and Innovation the supports available for persons who have been discharged from bankruptcy, were running profitable companies for over two years until the outbreak of Covid-19 but are ineligible for loans under the credit guarantee scheme for Covid-19 due to previous bankruptcy; and if she will make a statement on the matter. [9090/20]

Heather Humphreys (Cavan-Monaghan, Fine Gael)
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Microfinance Ireland (MFI) who operate the MFI COVID-19 Business Loan accept applications from people who are formally discharged from bankruptcy, within any time barrier, subject to full disclosure. Loan approval is subject to a full disclosure upfront and normal credit underwriting criteria. As with all loan applications to MFI, the application does not guarantee loan approval.

The MFI Covid-19 Loan was introduced as a support to microenterprises to help them access funding arising from the Covid-19 crisis.

These loans are available for eligible microenterprises responding to Covid-19-related difficulties, the negative impact of which must be a minimum of 15% of actual or projected income or profit. Loans up to €50,000 are available with terms that include a six months interest free and repayment free moratorium, with the loan to then be repaid over the remaining 30 months of the 36-month loan period.

MFI provides vital support to microenterprises by filling the lending gap in the market by lending to business that cannot obtain loans from other commercial lenders. It lends to business that do not meet the conventional risk criteria applied by commercial lenders and applies interest rate charges for its lending which are not reflective of its credit risk.

Standard loans from Microfinance Ireland have interest rates of between 6.8% and 7.8%. Given the cost burden to businesses even with these subsidised rates of interest I decided to apply a substantial reduction in the interest rate to 4.5% on the Covid-19 loans provided by MFI. This reduced rate is available to all micro-enterprises where the application is made through the Local Enterprise Network or referred by a bank or Local Development Committees.

As these loans are available interest free for the first six months, the net effect is to further reduce the net interest rate payable over the period of the loan.

The types of businesses normally supported, if they could obtain unsecured bank funding, would normally attract a significantly higher rate of interest due to the unsecured nature of this lending and the inherent risk. Microfinance Ireland is a not-for-profit lender and is loss making due to the nature of the risk it is mandated to take.