Microfinance Ireland

Lorna Coleman

Microfinance Ireland

 Set up by the Government to provide loans to

newly established or growing microenterprises

, with

commercially viable proposals

that do

not meet the conventional risk criteria

applied by commercial banks.

 MFI is ‘additional’ lending which would not otherwise be provided by banks. Banks remain the

primary and dominant

supplier of finance to microenterprises.  Applicants should have

a viable business plan

and be able to demonstrate that they

have been refused conventional bank credit

.

 Loans to

top up bank credit

may be available in certain cases where it is clear that the business would not go ahead without MFI 2

Definition of a Microenterprise?



Less than10

staff & turnover and/or

Bal Sheet < €2m

 Estimated to account for over

90% of businesses

in EU and Ireland  May be a

start up

or an

existing business

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Loans

 Loans from

€2k to €25k

(average loan size €16k at present)  Term

three years

 Interest rate is

8.8%

 Loans will

not be provided

where

venture capital or grant aid

is more suitable 4

Assessment Criteria

• MFI will assess a loan application based on a number of criteria; – A

realistic business plan including cash flow projections

– Proven business models with prospect of

near term cash flow

– The

number of new jobs and social impact

– An

interview

with the entrepreneur to assess; skills, character, viability of the plan and commitment to the business – A

financial commitment

by the entrepreneur although not mandatory is

desirable

– Completion of a ‘

start your own business’ course

and / or working with a

mentor

will be an

advantage

.

• Adverse credit history / absence of credit history

will not preclude

a loan provided there if full disclosure and evidence that debts have been dealt with honourably 5

A good Business Plan

should include the following essential elements:



Promoter’s experience and skill set to operate the particular business



Realistic cash flow projections for 3-years



Evidence of repayment capacity



Personal financial commitment



Evidence of good market research



Breakdown of how funds are to be utilised



Unique selling points

6

LEO / Microfinance Ireland Loan Product

 Loan at 1% Discount compared to Direct Channel  Application assistance by LEO to client  Provision of mentoring as required by loan approval  Local Loan application Assessment with final decision resiting with Microfinance Ireland

Service Commitments

 Assistance by LEO as required by loan applicant  Transparency with Client on Applications potential  Local assessment signed off by Head of LEO  8 Day turnaround of completed applications at LEO level  2 Day turnaround of LEO assessment by Microfinance Ireland and sign of by CEO.

HOW TO APPLY

• Go to your LOCAL ENTERPRISE OFFICE • Complete an application form – A business plan – Three years cash flow projections • Supporting Documentation • LEOs will in the first instance assess (within 8 days) • MFI will finalise the loan offer letter etc within 2 days 9

Application forms available from www.localenterprise.ie

or www.microfinanceireland.ie

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