The changes follow a review of Microfinance Ireland (MFI), which provides loans of up to €25,000 to businesses who employ 10 people or less and who are not able to access credit from traditional sources like banks.
The requirement for microenterprise to have a bank refusal before applying for an MFI loan has now been removed, Employment Minister Ged Nash announced this morning.
Before now firms could only secure loans having been rejected by banks. The review found this requirement was acting as a deterrent to some businesses.
Minister Nash also said that MFI will now work with banks to introduce an automatic referral system to MFI where loans are declined.
He said: “The changes we are introducing, particularly removing the need for a bank refusal before applying for a loan will mean many more microenterprises will be able to access credit to grow and create more jobs.”
Geraldine Kelly, Chairman of Microfinance Ireland, welcomed the new measures announced and said more micro businesses will be given a chance as a result.
“In the last six months alone, we have increased our lending by 52%, reflecting the improving economy, and we anticipate greater demand for our services in the months ahead. Microfinance Ireland is now providing funding to over 511 small businesses throughout the country, 76% of which are outside of Dublin.”
She said the funding is supporting 1,121 jobs with that number expected to jump to 2,000 jobs by the end of 2015.
Since being set up two years ago, MFI received 729 applications for loans and released €5m in funding. The average loan size was €15,400.
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