DETAILED WORK is under way on a Government-backed loan guarantee scheme for viable small businesses, the Minister for Enterprise, Trade and Innovation Batt O’Keeffe has said.
Mr O’Keeffe told the annual conference of the Small Firms’ Association (SFA) he is hopeful the detail on how the scheme would operate could be finalised shortly.
The scheme, which is being worked on by officials from his department and the Department of Finance, would complement rather than substitute the main banks’ lending commitments under the bank recapitalisation scheme, the minister said.
A spokesman for Mr O’Keeffe said a “very targeted, tailored scheme” was being looked at that would be available to “high potential start ups”.
Mr O’Keeffe said the scheme would “target market failure in small business lending when commercially viable businesses fail to get credit because of insufficient collateral and information deficits despite having demonstrated an ability to repay”.
He said loan guarantee schemes operate in more than 100 countries.
“Ireland is one of the few nations in the European Union that does not have some form of loan guarantee scheme,” said Mr O’Keeffe.
Liz Hughes, head of the Association of Chartered Certified Accountants, said it welcomed the announcement as lack of access to credit was the biggest issue facing small business.
“We have noted the inclusion of the word ‘viable’ in the Minister’s speech and would ask that the scheme be simple and easy to apply for, without the need for complex business plans or auditor certificates, as small business simply can not afford to pay for these,” she said.
Mr O’Keeffe said he was finalising plans to ensure the County Enterprise Board structure was properly configured to help small business play its part in Ireland’s economic recovery.
He said Ireland was regaining lost competitiveness pointing to falling salary levels and declining energy, capital and commercial rental costs.
“We aim to save €500 million over the next two years by reducing the administrative burdens in company law, health and safety and employment legislation,” said Mr O’Keeffe.
