Microfinance Ireland changes lending terms
Small businesses will no longer need to be refused credit by a commercial bank before they can apply for lending from State-backed fund Microfinance Ireland. The change was announced this morning following a review into the fund, which has been operating since 2012.
MFI chairman Geraldine Kelly said the requirement for a bank to refuse a company credit before they can apply to MFI is being removed as it may act as a deterrent to some. The review also suggested the board of the fund should be given more flexibility to adapt to market changes, while an automatic referral system from commercial banks is also being investigated. MFI can provide loans of up to €25,000 to businesses employing ten people or fewer. To date it has approved €7.8m worth of loans following 729 applications.
It said the average loan size has been €15,400, with the majority of loans going to companies outside of Dublin. However MFI said its initial targets for lending were overly ambitious, as many small businesses have been focused on repaying existing credit rather than taking out new loans.