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A GOVERNMENT-SPONSORED scheme that was supposed to provide €90 million in loans to small and medium enterprises has lent just €3 million since its launch in 2012.
The Microfinance Ireland scheme provides loans of between €2,000 and €25,000 to what it calls “commercially viable proposals that have been declined credit”.
However, despite much fanfare when it was launched in 2012, the scheme has approved just €3.022 million across 192 loans from a total of 475 applications, and attracted much ire from employer bodies.
Low demand blamed
MFI acknowledged today that it “would like to see more applications”, but blamed the low rate of demand for its service among borrowers for its poor performance to date.
In a statement, a spokesman said: “Our lending activity is demand-driven, and demand among borrowers has been lower than was originally anticipated.”
However, Patricia Callan of the Small Firms Association suggested that MFI had its messaging wrong from the start.
She said that the fund should be actively targeting start-ups and unemployed people, rather than established businesses. She also criticised the fact that applicants must be rejected by a bank before applying to MFI.
“The fact you have to go to a bank and be rejected is a hindrance. People want to be able to go and apply directly for these grants.”
She said that many small business people weren’t aware of the scheme thanks to poor communications and badly thought out strategies.
“Microfinance in principle is a good product – the budget should easily be exhausted, but are they getting the message out? I don’t think people even know if they exist.”
Great expectations
When the scheme was launched in 2012, Minister for Jobs Richard Bruton promised that 5,500 micro-enterprises would be able to avail of the scheme over its ten year lifespan.
At the launch, Bruton said that “the Government is acting to ensure that a much wider range of businesses who are refused credit by the banks have access to microfinance lending”.
The scheme is due to be reviewed this October, after it has been in operation for two years.
The original chief executive of the company, Adrienne Murray, left MFI earlier this year for personal reasons. Her replacement, Michael Johnson, is a former CEO of the Dun Laoghaire-Rathdown County Enterprise board, will take up the position later this month.
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The problem is simple this Government are not interested in SMEs, they want he multinationals in here sell Ireland on the Slave market. University Graduates working for 20K a year, need I say more.
This Government have pulled the plug on the middle class and are sucking the life out of the people by selling off Irish Water to the Multinationals. To add insult to injury they really believe that the people living in this country are so stupid that we will swallow this.
Sounds like a quango to me
You have to pay ordinary workers à décent wage in order to stimulate demand and then Sme’s flourish. You cant have it both ways
Loan threshold is too low at €25k given the effort involved, loop of being rejected by bank definitely off putting. Should be reviewed earlier than October if not working
Why not link this fund to the mentor scheme or a product development fund in association with 3rd level institutions ?
So sme’s and startups get the support and guidance they need so the spend can be quantified and monitored.
Or Use the fund to build or convert empty warehouses into enterprise centres with retired business people installed to advise,not council workers
No need top link it to 3rd level institutions. What we need is a scheme exactly like the US SBIR funding designed to foster new innovation. It has been hugely successful. The EU attempted to emulated it, but because they don’t understand the first thing about innovation they completely screwed up the implementation.
Innovators don’t need mentorship and advice. If they’re involved in innovation in the first place they are by definition are in unknown territory. They need untied financial support to get their ideas to a point where the uncertainty can be quantified and venture capitalists can step in.
Because most of the people with the brains and drive to start small businesses have left the country, perhaps?
Maybe it’s because even if they support an SME, the regular person on the street can’t afford to buy anything in it cause the government are still taking all our money in taxes!!!
Exactly…SME owners don’t need to apply to a quango for loans.
What they do need is a domestic economy containing a confident working and middle class unburdened by excessive taxation and debt to sell their products and services to
@ Niall H
They are not a quango, they used to be called First Step and were an angel investment company up until 2012.
I used them on 2 occasions to get started up and expand my company in the height of recession and were a pleasure to deal with.
I think the problem is that when people hear there’s 9 mil in funds available, they assume they HAVE to use it. Ultimately, it still has to be a viable business to lend to in the company’s eyes..
I agree 25k max loan is a little on the low end, but when every bank laughs at your application because you have no track record, then 25k turns out to be a lot, you learn to use it wisely.
Cool, just thought it sounded like one the way so little of the funding was being used and then the stepping down of people at the top etc. wonder how much the pension is for working with this quango that’s not a quango as you say?
Maybe the fact that pure useless Richard Bruton is the jobs minister has something to do with it.
Mr Spoof ‘that’s not measurable’ Bruton has presided over the exploitation of Irish workers to the extent that they have little or no disposable income because of low wages, massive taxes, high costs.
But Bruton is OK on e200,000 plus expenses plus massive pension plus stupid slap my face grin !
Lack of commercially viable SMEs is a big factor.
Just because you set up a company making turf scented candles or online nappy recycling, doesn’t mean any lender should just give you money to be seen to do so. The business has to have a potential future. A large contingent of the SME’s who complain they can’t get credit is for sound reason.
I am starting a business at the moment. They do want to support something that fits into Ireland international pitch if its a domestic business.
It also needs to be a good idea, well researched with a plan that is credible. They also need the relevant entrepreneur to be credible as an individual.
Look at Dragon’s den – while it is entertainment rather than real TV, the entrepreneurial businesspeople stand out from those with ideas that may have nowhere to go.
It’s because the only thing the government is efficient at organising is more ways to tax the people. Nothing else matters to them.
Crazy scheme that is not applicable to small business in the real world and is full of needless costs in the application process. They need some input from people actually running small businesses to come up with something that will offer help to those who fall foul of the banks’ blanket quiet policies on lending. Micro businesses or self employed will not get bank loans especially if in manufacturing. They will be told to not bother applying. That means they have to pay accountants to produce accounts and all the other requirements to be officially turned down. That costs. As usual with all these schemes the accountants are the only ones who gain anything from it. If people have a great product and big order book but cannot access cashflow loans then they will go North or to England where they are welcomed. I’ve witnessed that and the lost jobs. It’s all pure incompetence by those people who design these schemes. When small businesses and self employed have just paid all their tax to save bondholders and keep the banks in business and their employees in jobs, watching such great potential leave the country with no plans to come back sickens me. It’s treason.
New SMEs don’t need a loan – they need equity investment and that’s why this scheme doesn’t work. It would be easy to design something if there was a will and a little imagination.
Why isn’t this government support for SMEs working?
Because FG.
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