Written Answers. - Establishment of Small Business.
Mary Wallace
Ceist:
114
Miss M. Wallace
asked the
Minister for Enterprise and Employment
if he has given consideration to the need for low cost finance to be made available to people establishing new small businesses; and the proposals, if any, he has to recommend the availability of a low cost funding package for small businesses with the requirement of capital under £10,000 which would employ four or fewer personnel in recognition of small local enterprise.
I am greatly aware of the high cost funding difficulties which face small businesses in their attempts to develop into larger more viable entities.
A number of low cost funding initiatives are currently in place which are specifically intended to provide assistance to the smaller business operations. In particular I would mention the following initiatives which provide varying forms of relatively low cost funding for the smaller business operations.
IDA Interest rate subsidies: Under the IDA Industrial Development Act 1986 the IDA can provide grants for the reduction of interest payable on a loan in the context of providing working capital in the establishment of small business operations. These facilities are largely administered under the Enterprise Development Programme of the IDA.
Bank of Ireland Enterprise Support Unit: The Bank of Ireland Enterprise Support Unit was established in 1989 following an initiative from the then Minister for Finance. The objectives are to lend funds to business start ups, backing up such lending with financial management assistance. Such funding is generally provided on the basis of AA interest rates without normal risk loading, and without personal guarantees. The initiative has already provided support to over 80 enterprises with an associated increase in employment in such enterprises.
Area Based Partnerships: The main contribution of the 12 Area Partnership Companies established under Programme for Economic and Social Progress has been in promoting a community-based response to longterm unemployment at local level. There have, however, also been some significant developments in promoting smallscale investment in indigenous industry within those areas. Most Partnerships have drawn upon the EC Global Grant for Local Development to set up some form of revolving loan fund to assist business start-up and expansion. These low interest loan funds have helped to overcome difficulties which unemployed people encounter in accessing funding for enterprise through conventional funding institutions.
BES: The Business Expansion Scheme has in the past made a significant contribution to the funding of small businesses, and earlier this year the Government extended the scheme for a further period of three years while at the same time removing the lifetime investment cap on individual investors.
The Business Expansion Scheme continues to be a valuable source of low cost equity funding for small manufacturing operations, which would otherwise find difficulty in raising the necessary capital to operate and develop their business enterprises.
Business Innovation Fund: The Business Innovation Fund under the aegis of the Business Innovation Centres provides seed capital finance for small business projects at the start up/early stage development in their business life. This fund which has been in operation since December 1991 is currently seeking to expand its investment base, and this fund will continue to develop as a source of seed capital for early stage funding of Irish business ventues in the future.
Besides the above measures there are also:
(A) the International Fund for Ireland which has provided support for small business initiatives in the more restricted border county area and
(B) The Recent First Step Fund — a private sector initiative intended to provide support for early stage business requirements.
In conclusion, I want to emphasise that I am committed to the development of local enterprise within the context of promoting the real strengths and potential for development of each area and which stimulates effective action to promote economic development and employment creation. In the context of the arrangements to establish County Enterprise Partnership Boards, at present under way, I would envisage a range of different approaches to enterprise promotion including the provision of workspace, the establishment of loan funds and the identification of gaps in the market being pursued at local level.
Given the recent reductions in Irish interest rates and the expectation that this downward trend in the cost of debt funding will continue I would hope that the cost of funding for Irish business will continue to reduce throughout the remainder of 1993, allowing Irish business to compete more effectively in the marketplace.
