Temporary Partial Credit Guarantee Scheme
The Government is to set up a micro-finance loan fund which it hopes will generate €100m in additional lending for business.
There will also be a temporary partial credit guarantee scheme, which will be in place by the first quarter of next year.
The announcement was made after a special Cabinet meeting on jobs and employment today.
The SFA and Chambers Ireland welcomed the plans, but ISME described the announcement as “much ado about nothing”.
The new loan fund is due to be in place in the first quarter of 2012 and is expected to benefit 5,000 business over a ten-year period. It will use an additional €10m of Exchequer funding to leverage further funding from private sources.
Jobs, Enterprise & Innovation Minister will now draft legislation on the loan guarantee scheme and appoint someone to run the scheme. The total amount of funding guaranteed will depend on demand from businesses.
The scheme will partially guarantee loans by banks to viable businesses which are having problems gaining access to credit.
The two initiatives are part of what the Government is calling an “action plan for jobs”, which will set quarterly targets for all government departments to hit on implementing measures aimed at boosting job creation.
The Small Firms Association welcomed the move, but said the absence of a specific amount for the loan guarantee scheme was concerning. “We need a scheme with significant scale in the order of €400m and we need the Government to commit that it will meet the demand in full for guarantee funding from small businesses,” said SFA director Patricia Callan.
Small business group ISME has criticised the plans, however, describing them as “much ado about nothing”.
ISME chief executive Mark Fielding, however, said the loan guarantee scheme was promised to be introduced months ago, describing today’s move as “another announcement about an announcement”.
Chambers Ireland welcomed the action plan announcement, but said the group monitoring the plan must include representatives of the private sector.
Minister of State for Small Business John Perry said plans for a temporary partial credit guarantee scheme were well advanced, while a microfinance fund to provide loans to small firms was being developed. He hoped to formalise proposals on this before the end of this year, the aim of which was to stimulate lending to sustainable micro-enterprises employing up to 10 people with loans of up to €25,000.
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