Microfinance Ireland Into Its Stride?

04 Feb 2016 | 03.46 pm

Microfinance Ireland Into Its Stride?

Loan applications up 50%, lending hits €5m

04 Feb 2016 | 03.46 pm

Things are looking somewhat better at Microfinance Ireland, the state-backed not-for-profit lender to small businesses, where loan applications and approvals are both on the rise.

With 752 businesses applying for loans during 2015, the agency is showing an increase of 48% in applications over 2014. Approvals for startups, sole traders and small businesses also rose, with the lender approving €5.4 million in funding to 357 businesses.

That brings the total lent by the agency since its inception in 2012 to €11.7m, just short of €4m per year. Continuing this trend would leave the agency’s lending over five years at just under €20m, not quite half the five-year target of €40m in lending that enterprise minister Richard Bruton was hoping for three years ago.

Even so, the €5.4m lent in 2015 is now supporting 930 direct jobs.

High Risk

MFI boss Michael Johnson maintains that applicants are high risk, having been unable to satisfy standard bank lending criteria, which may explain why the approval rating is stuck at 47% in 2015, a small rise compared with the earlier rate of 42% to 45%.

Johnson added: “Small business customers are reporting high levels of satisfaction with the loan support MFI offers; results show that 85% would apply to MFI again for future funding, 95% were happy with the term and flexibility of payments on their loan, while 96% would recommend MFI to a friend or family.”

MFI can lend to micro and small businesses that employ fewer than 10 people and have turnover of less than €2m. Loans can range from €2,000 to €25,000, and the average loan approved during 2015 was €15,190. The interest rate is much the same as is charged by some banks.

 

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