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Dublin: 7°C Wednesday 26 January 2022

Happy days - there's lots of good news out there today if you own a small business

Ireland’s guarantee scheme for small companies is being extended, while crowd-sourcers LinkedFinance announced a new €250 million SME loan fund

Image: Shutterstock/Viorel Sima

THERE HAVE BEEN no fewer than three announcements today regarding small-scale enterprise in Ireland, and all are positive.

State guarantee extended

To start off, Junior Minister for Business and Employment Ged Nash has announced some changes to the state’s credit guarantee scheme for small and medium enterprises (SMEs).

The scheme will now allow businesses whose lending banks are leaving the Irish market to refinance with Irish banks using the guarantee, while the scheme has also been extended from three to seven years.

Low Wage Commissions Ged Nash Source: Sam Boal/Photocall Ireland

The guarantee scheme was initially intended for new businesses only.  It allows a SME struggling to secure finance to underwrite a loan to a maximum of 75% using the state as guarantor.

“Clearly the job creation element of the Credit Guarantee Scheme is very welcome but overall it has not had the impact that we had hoped for,” said Nash.

 I believe that the changes we are introducing today will mean that many more SMEs will be able to avail of the scheme.

Reaction from the Irish Small and Medium Enterprises Association (ISME) has been positive, a marked contrast from their reticence regarding the launch of the state SME loan fund last week.

“These changes are very welcome,” said Mark Fielding, CEO of the association.

We are pleased that the relaunched scheme addresses the problem by making the guarantee available to businesses whose banks were exiting the country.
The onus now is on the banks to inform customers that they can apply for the guarantee, something they have not been doing adequately to date.

Crowd Funding

Next up, Linked Finance, Ireland’s largest crowd-funding site, announced a €250 million expansion of their lending fund by 2017, targeted specifically at small businesses struggling to secure finance from the established banks.

The crowd-sourcing company has big plans for the future.  The increased lending fund is expected to create 40,000 jobs in the next three years, all via SMEs.

“We’re letting companies know that there’s a real alternative to the banks who like to say ‘no’,” said Peter O’Mahony of Linked Finance

 A key differentiator for us rests in the fact that lenders and borrowers become partners in success rather than simply the parties to a transaction.

Again, the news was warmly received by Ireland’s small company representative bodies, with Patricia Callan of the Small Firms Association (SFA) describing the €250 million windfall as a ‘huge help’ towards strengthening Ireland’s economic recovery.

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Meanwhile, AIB have announced an agreement with global credit insurance firm Euler Hermes designed to ease the red tape required of Irish SMEs when exporting goods via a product called Simplicity which offeres a minimum of 60% cover.

Credit insurance is a crucial for exporting companies as the insurance provides certainty that invoices will be paid.

The drawback here is obviously that a company needs to be a customer of AIB to take advantage of the product.  That being said, the ready availability of such insurance is no bad thing.

“Very few companies cover their exports with credit insurance as they believe it involves too much red tape,” said Euler chief executive Gerard van Kaathoven.

Simplicity should be easy to understand for SMEs. It will support and encourage them to develop their business overseas.

Good news all round, perhaps even cause for a celebration.


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