My attention has indeed been drawn to the concerns raised regarding difficulty in accessing capital by start-up businesses as a result of the outbreak of COVID-19 in Ireland and the subsequent public health restrictions.
Regarding the points raised about the ability of start-up businesses to access capital, I would emphasise that there are supports in place to help start-ups and microenterprises as they seek to access appropriate financing in the early stages of their businesses. Throughout the pandemic, the network of Local Enterprise Offices have continued to act as a point of contact for businesses around the country, and they can offer advice and support to small businesses, including start-ups, about how best to proceed and what supports are available to them.
The latest SME Credit Demand Survey, published 20 November, reported that 85% of credit applications were approved during March and October 2020. This rate is consistent with previous survey results. However, the survey reported the demand for credit by SMEs remained subdued at 18%.
However, for micro-businesses that have had difficulty accessing finance through banks or other commercial lending providers, there are also Start-Up Loans available through MicroFinance Ireland [MFI] to microenterprises. These loans range from €5,000 to €25,000 for terms of up to three years, with an interest-only initial payment period of three months.
Through Enterprise Ireland [EI], Government has also had long-term involvement in the seed and venture market, bringing investment to Irish businesses and helping them start and scale. To ensure continued support for start-up companies during the COVID-19 recovery, the Government is also investing in an additional fund to support highly innovative firms.
Since 1994, EI has managed five Seed & Venture Capital Schemes to ensure that there is an available and effective overall funding ecosystem and to address market failures in this area. EI has made commitments to venture funds of €549m under the five Schemes. In 2018, the Department of Enterprise, Trade & Employment, announced the most recent Seed & Venture Capital Scheme with a further allocation of €175m to be committed over the lifetime of the Seed & Venture Capital Scheme (2019-24), the first commitments under this scheme were made in 2019 and will continue to be made over the coming 12-24 months to fully deploy all the available capital. A further €10 million was announced in the 2020 July Stimulus and is currently being deployed, with an additional €11 million committed in Budget 2021.
EI continues to support and fund the Halo Business Angels Programme (HBAN). The Programme is a joint initiative with Intertrade Ireland and Invest Northern Ireland aimed at building a strong funding ecosystem at each stage of the funding journey for start-ups. The availability of Angel funding at the early stages of a company’s development provides both essential capital and hugely valuable industry experience to support companies through this early phase of growth. In 2019, HBAN announced that over €100M of angel investment has been mobilised across the island of Ireland since the programme commenced in 2007.
EI also operates the Competitive Start Fund, the purpose of which is to accelerate the growth of start-up companies that have the capacity to succeed in global markets. The fund is designed to enable those companies to reach key technical and commercial milestones. In 2020 Enterprise Ireland approved 45 applicants for funding under three Competitive Start Fund calls.
In Budget 2021, the Government also announced €30 million in funding, through the Irish Strategic Investment Fund [ISIF], to develop an early stage seed and growth capital investment scheme, targeted at domestic, high innovation enterprises. The Department of Enterprise, Trade & Employment is working with the Department of Finance, representatives from EI, ISIF, the European Investment Bank and the European Investment Fund to develop a proposal to leverage further European capital and establish an equity fund using this €30 million.
