Dáil Éireann Debate, Wednesday - 6 June 2012
274 Deputy Patrick O’Donovan asked the Minister for Jobs, Enterprise and Innovation if she will consider providing a financial package access to credit which would assist in the set up costs for persons in receipt of social welfare who want to start up a business; and if he will make a statement on the matter. [27584/12]
Amharc ar fhreagraThe Programme for Government details a commitment to establish a Microfinance Loan Fund targeted at start-up, newly established or growing micro-enterprises across all industry. The Action Plan for Jobs reconfirms this commitment. It is generally accepted that lack of credit severely restricts opportunities to create and support micro enterprises and in so doing help reduce unemployment.
When viewed in a macroeconomic context, microfinance is a very cost effective job creation/protection mechanism generating a high rate of return. In many cases the business promoters and any other staff hired come from the unemployed ranks and are therefore drawing State benefits. Existing employees who choose the entrepreneurial route and set up their own business are also likely to create a residual employment opportunity in their previous organisation.
The Microfinance Fund is designed to stimulate lending to sustainable microenterprises and is targeted at start-up, newly established, or growing micro enterprises across all industry sectors, employing not more than 10 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. This is part of the Government response to the unmet demand in Ireland for micro-finance.
The Government has 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.
The €10m allocation, supplemented by €15m bank borrowing in tranches of €5m over years 2,3 and 4, will generate €40m in loan expenditure and create 3,800 jobs over a 5 year period. This is based on €8.8m of loan demand and 20% Bad Debts and will greatly assist employment in the microenterprise sector. Finalisation of the required legislation to establish the Fund is on-going and subject to completion of all administrative and corporate governance requirements, it is anticipated that the Loan Fund will become operational in Quarter 3 of this year.
Furthermore, I would bring the Deputies attention to self-employment supports from the Department of Social Welfare. People who are getting social welfare payments can keep all or part of their payment for a time after becoming self-employed if they take part in one of the Enterprise Allowance schemes. There are two schemes: the Back to Work Enterprise Allowance Scheme and the Short-Term Enterprise Allowance Scheme.
Approval normally involves an interview to assess the viability of the proposed project and to provide advice on funding, start your own business courses or other relevant aspects of self-employment.
