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Microfinance Ireland the government funded, not-for profit lender is providing much needed financial support by way of loan finance up to €25,000 to micro-enterprises who have fewer than 10 employees and turnover of less than €2m. Many micro businesses report that access to finance is a critical barrier to starting and expanding their businesses. Microfinance Ireland is here to fill these funding gaps for businesses that cannot access bank loans.

Microfinance Ireland saw steady demand for its loans in 2023 with small businesses once again showing their resilience in the face of many challenges, including a tight labour market labour and higher business costs. Recognising the impact of these cost increases, Microfinance Ireland reduced its interest rates on new loans by 1% in early 2023 to 6.5% (5.5% if the application is submitted through the Local Enterprise Office).

Microfinance Ireland’s interest rates are fixed for the duration of the loan which gives the borrower certainty as to the monthly repayments for the duration of the loan. This is particularly important in an environment where many other costs are increasing.

In terms of trends, Microfinance Ireland CEO Des McCarthy commented: “We are increasingly seeing businesses seeking loans to progress small energy efficiency initiatives, often in conjunction with the grant funding available from the state agencies.

“Businesses are realising that investing in green initiatives, even starting with small items, is necessary to ensure the future survival and growth of their businesses.”

In Q4 2023, in response to the floods and other extreme weather events, Microfinance Ireland developed a new loan product for businesses that were impacted by the events.

The Flood Relief Loan was structured with a low rate of 5.5% and a 6-month payment moratorium to allow the business time to reopen and generate cashflow before payments commenced.

The loans are available to fill the gap between grant aid or insurance proceeds and the cost of reopening.

Microfinance Ireland work very closely with the Local Enterprise Offices throughout the country. The LEOs are often the first stop for start-ups, providing mentoring and advice such as the Start Your Own Business courses.

Microfinance Ireland recognise the benefits of these interactions with the LEOs through the reduced interest rate on loan applications submitted through the LEOs.

Looking towards 2024, Des McCarthy said: “Microfinance Ireland was established to assist entrepreneurs to start and expand their businesses.

“Research has shown that entrepreneurship is lower among certain groups including women, migrants, seniors, youth and people with disabilities often due to a lack of finance.

“One of our 2024 goals is to promote more actively our loans among these groups to ensure these ‘missing entrepreneurs’ have an opportunity to start their businesses and realise their dreams.”

He added that another strategic objective is the introduction of a new streamlined online application process which will allow customers to easily apply online and upload the documentation required for completing the loan evaluation.

“This will transform the customer application journey using technology while maintaining the high level of human interaction we have with each of our applicants ensuring that each applicant can make the best case for their business,” McCarthy explained.

“Our overall goal for 2024 is to increase the number of businesses that we fund and the number of jobs we support.”

Microfinance Ireland is well capitalised and has the funds to significantly increase lending to micro enterprises.

We would encourage businesses that need loans to build their business but cannot access bank loans to apply for a Microfinance Ireland loan at or through the Local Enterprise Office.

Photo: Microfinance Ireland CEO Des McCarthy.

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