Dáil Éireann Debate, Thursday - 15 October 2020
21. Deputy Catherine Connolly asked the Tánaiste and Minister for Enterprise, Trade and Employment the status of the newly opened Microfinance Ireland fund pursuant to the Microenterprise Loan Fund (Amendment) Act 2020; the number of applications received; the number and value of loans approved; and if he will make a statement on the matter. [25976/20]
Amharc ar fhreagraThe Microenterprise Loan Fund operated by Microfinance Ireland assists businesses with fewer than ten employees. It provides much-needed funding to help microenterprises meet payments for stock, working capital requirements and other overhead expenses through the provision of low-cost loans.
Microfinance Ireland provides finance to microenterprises by filling a gap in the market by lending to business that cannot obtain loans from other commercial lenders. It lends to businesses that do not meet the conventional risk criteria applied by commercial lenders and applies interest rate charges for its lending which are not reflective of its credit risk.
With the arrival of COVID-19 in Ireland and the subsequent impact on businesses across the country, Microfinance Ireland introduced the COVID-19 Loan Scheme to provide loans to microenterprises directly impacted by the effects of the virus.
The Microfinance Ireland COVID-19 Loan Scheme assists businesses which have been impacted negatively by COVID-19 with loans of up to €25,000. The first six months are repayment and interest free. Repayments commence in month seven for the remaining period of the loan. A Government rebate is available for the interest paid in the following six months (months 7-12 of the loan). A rate of 4.5% for the remaining period of the loan is applied. This reduced rate is available to all micro-enterprises where the application is made through the Local Enterprise Network or referred by a bank or Local Development Committees. The rate for direct applications to Microfinance Ireland is 5.5%.
The Microfinance Ireland COVID-19 Loan Scheme has seen a very strong uptake with 1,015 applications received, and €18.68 million in loans approved to 687 businesses under phase 1.
Following implementation of the Microenterprise Loan Fund (Amendment) Act 2020, which made additional capital available to Microfinance Ireland, I was pleased to announce the launch of phase 2 of the scheme on the 31st of August. Since the launch of phase 2, 256 applications have been received, of which 97 have been approved for a value of €1.9 million, with a further 96 applications in progress.
The total value of loans approved under the Microfinance Ireland COVID-19 Loan Scheme is €20.58 million which represents more than three years of normal lending volumes for Microfinance Ireland in a period of just over six and a half months.
Importantly, with 77% of its lending to businesses outside Dublin, Microfinance Ireland provides an essential support for businesses who are hoping to resume or boost their economic activity over the coming weeks and months in every county in Ireland.
