State-backed fund Microfinance Ireland has opened its new €15m Covid-19 fund to support small businesses through the current period of uncertainty and to protect jobs that have been impacted by the coronavirus pandemic here.
Small businesses can apply for loans up to €25,000 for a three-year term with no repayments and no interest due for the first six months of the loan.
Repayments start in month seven but the interest paid in months seven to 12 of the loan will be refunded by Government in month 13, once all repayments in those six months are paid in full, giving 12 months interest free.
The loan is only available to micro-businesses, but Microfinance Ireland CEO Garrett Stokes said that definition covered most firms in the country.
“Any business – and that could be a sole trader or partnership or limited company – that has less than ten employees and a turnover of up to €2m is what’s defined as a microenterprise,” he said.
“That covers approximately 94% of all businesses in Ireland.”
To apply, companies must have been refused finance by a traditional lender like a bank. This particular scheme is also for those affected by Covid-19 – so would not be suitable to newly-established firms.
“The Covid loan is specifically for people who were negatively impacted by the pandemic,” Mr Stokes said.
“We do have other funds for start-ups or other micro-enterprises which would support businesses that are just starting up now or looking for expansion funds,” he said.
Mr Stokes said he expected the money to be used by firms trying to re-start their businesses, perhaps through the purchase of stock or investment in making a premises Covid-compliant.
He said he anticipated that most applicants would still have their businesses closed – or at least have significantly reduced income – and this could help them to get back on track.
After unprecedented demand from micro-businesses, the initial Covid-19 Microfinance Ireland Loan was fully subscribed by July.
Before suspending the fund, MFI said it had supported 687 businesses with circa €20m in loans approved.
It also supported 760 of its existing customers with loan moratoriums and loan restructures.
Mr Stokes said he was delighted to be in receipt of additional government funding enabling us to reopen for applications from today.
“Since March, demand for MFI loans, particularly the Covid-19 loans, has exceeded all expectations, resulting in all funds being fully subscribed some weeks ago,” Mr Stokes said.
“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 added.
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