State-OWNED lender Microfinance Ireland (MFI) will cut the interest it charges small businesses by 1 percentage point from the start of July.
Loans of €2,000 to €25,000 are provided by MFI to very small businesses.
The not-for-profit body will now charge an interest rate of 7.8pc on its money, down from 8.8pc.
The company said that applicants to Microfinance Ireland via their Local Enterprise Office can avail of money at the discounted rate of 6.8pc.
Originally set up following the financial crisis, MFI was to provide loans for small companies at a time when the main banks were reluctant to lend to them.
Jobs minister Mary Mitchell O’Connor said
“It is very much in line with the thrust of the Government’s Action Plan for Jobs, to make loans to micro-enterprises right across the country more affordable.
“I am very much aware that micro-enterprises are at the heart of rural Ireland and I want to create an environment for them to grow and develop right across the country,” the Minister said. The news follows the recent appointment of Garrett Stokes as chief executive of MFI.
In Ireland there are around 183,000 SMEs with around 12,000 companies entering the market each year and a further 10,000 shutting down.
UK-lending firm BMS Finance entered the SME lending market here earlier in the year following a successful spell in the UK.
MFI has loaned out around €11.5m since it was set up and the Minister recently claimed that it’s supporting in excess of 2,000 jobs.
In addition, approved Microfinance Ireland loan applicants can also benefit from mentoring services, arranged through the Local Enterprise Offices and tailored to the specific requirements of the business.
Garrett Stokes, the newly-appointed Chief Executive of Microfinance Ireland, said: “The interest rate cut and mentoring support will mean our business loans are now even more affordable. It also means that our clients can receive expert one-to-one mentoring through their Local Enterprise Office, greatly increasing their chances of commercial success and helping to sustain jobs in the longer term. Since Microfinance Ireland was set up in 2012, we have approved €14.1m in loans to 944 businesses supporting 2,148 jobs. We’re happy to support all types of micro- businesses, helping to spread the economic recovery right across the country.”
Paul Reid, on behalf of the Local Government Economic, Enterprise and Tourism Committee, said: “Local Enterprise Offices, as the one-stop-shop for small businesses around the country, are very happy to continue to work in close partnership with Microfinance Ireland, to provide a range of both financial and non-financial supports for micro-businesses. Both the interest rate cut for new lending and the provision of mentoring for Microfinance Ireland clients are very positive steps in supporting local enterprise, improving economic recovery and developing business growth overall.”
Niall O’Donnellan, Head of Entrepreneurship in Enterprise Ireland, commenting on this announcement said: “I am delighted that mentoring services are now available for Microfinance Ireland clients through Local Enterprise Offices. This is a valuable support for micro-enterprises ensuring they can reach their potential.”