Businesses with fewer than 10 workers can tap loans of up to €25,000 from a new €15 million fund launched by Microfinance Ireland (MFI) to aid them through the Covid-19 crisis .
Government-backed MFI loaned €20 million to 687 businesses up to July, when its first Covid-19 loan fund was suspended while it supported 760 others with repayment breaks and restructures.
MFI loans to “micro-enterprises”, that is any business, sole trader, partnership, limited company, with fewer than 10 workers and sales of less than €2 million a year.
From Monday, the not-for-profit organisation is offering loans up to €25,000 to these businesses for three years with zero repayments or interest for the first six months.
Borrowers begin repaying the loans in month seven. Once those repayments are made in full, the Government will refund the interest paid during the second six months on the 13th month of the debt’s term.
MFI points out that this means its loans are effectively interest-free for the first year.
Rates of interest
Interest is charged at 4.5 per cent if businesses apply through local enterprise offices or other referral partners, or at 5.5 per cent for applications made directly to MFI.
Garret Stokes, MFI’s chief executive, pointed out that demand for its loans, particularly Covid-19 supports, has exceeded all expectations.
“We can see where the demand is coming from most and our new Covid-19 loan scheme has been tailored to meet the ongoing needs of those micro-businesses as they navigate their way through the current challenges and beyond,” he said.
Cyril Forbes, the organisation’s chairman, said the cash would support micro-enterprises in “every town and county” in the Republic.
The new loan fund is one of the Government’s July stimulus package measures.
The Government founded MFI in 2012 to administer its micro-enterprise loan fund.
The organisation benefits from a guarantee given by the EU under its programme for employment and social innovation.
MFI provides an alternative source of cash to small businesses that may be unable to borrow from banks or other commercial lenders.
