Putting the money in

A new fund established by the Government, and lauded as a success in its Action Plan for Jobs, is set to deliver over €40 million in loans to businesses previously refused credit. Peter Horgan takes a look at the Microfinance Loan fund Scheme and how it will apply.

The scheme, due to come into operation in the Autumn, is expected to facilitate €40 million initially to business employing 10 or less that have been denied credit already.

The scheme will be managed by a new subsidiary, Microfinance Ireland, under the parent company Social Finance Foundation, set up in 2007 to deal with this area. Businesses that are eligible must have no more than 10 staff and must have been declined for credit by the banks already, including due to the absence of collateral.

According to the Department of Jobs Enterprise and Innovation, the scheme is expected over the next five years to benefit more than 2,700 businesses and create 3,800 jobs. The limits on loans per company will be set at €25,000 with the average expected to come in at €16,000.

One company that may benefit is a new initiative set up by Carrigaline woman Deirdre O’Leary.

Deirdre’s company produces wristbands for children who get separated from their parents. The IDME Wristbands contain vital information and contact details for children that get separated from their parents, and despite positive reactions from companies and the Dublin Airport Authority, Deirdre has found it increasingly difficult to get any capital to invest in her product.

“We sold and borrowed a lot already to get started on initial stock,” says Deirdre, who previously worked in retail and recruitment until losing her job 12 months ago.

“A fund like the Microenterprise Scheme is vital for a business such as ours. We estimate that we need about €5,000 to really get our product out there on a wider scale so if we were to get more than that then more and more opportunities could be achieved.”

Deirdre explains that the Enterprise Board was encouraging but that it couldn’t secure any funding for her except matching what she had (which is very little) and told her to come back when there is a more national distribution possibility.

“The fact is that we have a sole distributor in Australia and in South Africa already but without finance we can’t possibly fill any orders at the moment. Moral support has been great but the lack of finance is really holding us back.”

The new fund was lauded as another example of the government’s commitment to creating jobs and supporting businesses by the Minister for Jobs, Richard Bruton.

“The Microenterprise scheme will ensure that over a ten year period, 5,500 viable businesses which would not otherwise have got access to finance will now be able to access credit, expand, and create an additional 7,700 jobs,” says Minister Bruton.

“People who have a business idea, but lack the capital to get it off the ground, whether they are unemployed or already in a job, will now be able to access the crucial finance that they need.

Further information on the Microenterprise Loan Fund can be found at www.djei.ie while IDME Wristbands can be bought at www.idme.ie.