Dáil Éireann Debate, Wednesday - 25 January 2012
5Deputy Peadar Tóibín asked the Minister for Jobs; Enterprise and Innovation if he will detail the action taken by him to develop a scheme to draw down support from the EU Progress Micro Enterprise fund to support start up and small businesses. [4336/12]
View answerThe European progress microfinance facility is a European Investment Fund initiative to support entrepreneurship and employment through microfinance activities. The European Investment Fund does not provide direct financing for micro-entrepreneurs, micro-businesses or individuals. Financing is made available through intermediaries participating in the facility. Eligible intermediaries are any public and private institutions which provide microfinance loans and-or guarantees for individuals or micro-enterprises established in EU member states. The European Investment Fund provides selected intermediaries with capped guarantees partially covering their portfolios of micro-loans or guarantees on micro-loans granted to micro-enterprises.
I am developing a microfinance loan fund to provide loans for sustainable micro-enterprises. It is targeted at start-up, newly established or growing micro-enterprises across all industry sectors employing not more than ten 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.
My Department has had discussions with the European Investment Fund to explore the possibilities of access to the progress microfinance facility fund when established. Applications for participation do not require State involvement. To apply to become an intermediary, interested institutions must submit a formal application directly to the European Investment Fund. Applications can be made until 31 December 2013.
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. I am developing the structure of the microfinance facility to be established early this year. The matter will be pursued further with the European Investment Fund at that stage.
As the Ministers and Deputies on the other side of the House will be aware, a good chunk of the reason so many businesses and individuals are finding it so difficult is the credit system is frozen. The Government has announced a microfinance fund on a number of occasions, yet nothing has happened. The Minister of State indicated how the finance system would work, but the initial budget was to be €100 million which it was viewed would leverage a figure of up €500 million. This would enable institutions in EU countries to channel funding to businesses by means of a guarantee for institutions funnelling the money. This facility was created last March. How much money has the Government or the institutions drawn down to date from the fund and when will the microfinance plan see the light of day
This is the first time the State has provided a microfinance loan facility. The initial fund will be €10 million which it is hoped will leverage further funding from banks and other private bodies. The Government has consulted relevant stakeholders and legislation will be required. The key to the success of the facility will be local involvement through the county enterprise boards or the BIT network which is heavily funded by the Department to the tune of €2.2 million. Involvement by First Step is crucial to the viability of all small companies. There must be due diligence prior to funding small companies. It is not just a matter of giving out loans; management skills, mentoring and development of the company must be taken into account. It is not a matter of giving it initial funding in the hope it will become profitable. Many companies can be made better even without being in receipt of funding. This is the first time the State has become involved in this worthwhile fund. The previous Government talked about it for a long period. We are in the final stages and the fund will announced within a short time.
There are 180,000 micro-businesses in the country, some of which employ up to ten people. The European Investment Fund programme has been open for tenders on its website since last March. How much of the funding has the Government drawn down to date? This is a serious consideration and the failure to answer the question shows a deep disrespect for the 180,000 businesses mentioned, of which ISME estimates 50% are struggling to secure finance. The world and its mother knows that credit is frozen and that this is damaging the economy. I want to know how much has been drawn down to date.
The Government has guaranteed a sum of €3.5 billion to small businesses through the two pillar banks.
How much of the fund has been drawn down to date?
The fund is part of the bigger picture. The Government does not-----
How much of the fund has been drawn down to date?
The Government has given €3.5 billion through the two pillar banks-----
From this fund?
No, through the two pillar banks. The fund is open to private intermediaries to draw down funding-----
Therefore, the answer is nothing, no money has been drawn down.
Please allow the Minister of State to reply.
First Step has used the fund very effectively to date. As the Minister, Deputy Richard Bruton, has correctly stated, the exports of Enterprise Ireland and Bord Bia supported companies are the highest on record. We have met the two pillar banks and viable businesses are receiving funding, despite what the Deputy says.
