Frequently Asked Questions
We have provided a series of Frequently Asked Questions below. If your query is not answered on this page, please contact us directly
by clicking here.
- Q:What funding options are available for small businesses?
There are four main types of financing or funding that any business will use: equity; credit; government/EU support and its own funds.
Equity – businesses often start out with the owner putting his or her own money in (personal equity) but to expand and develop businesses often need more investment from private investors such as friends and family, business angels, venture capital companies and others.
Credit – many businesses borrow to finance their businesses whether it be for investment or expansion or for working capital.
Government/EU support – State agencies in Ireland such as Enterprise Ireland and the County and City Enterprise Boards and European Union agencies such as the European Investment Fund make available grants and supports for businesses.
Own funds – the cheapest way to finance your business is to carefully manage the cash that comes in and goes out to make sure that there is always enough to meet your needs. For more information about managing your cashflow, please click here.
A business usually seeks to strike a balance between debt and equity to finance growth – debt carries greater risk as the business must ensure it has the ability to repay the debt; where equity is obtained from a third party, the outside investor may seek some control over the objectives or management of the business.
Before deciding what form of financing is needed, a business should consult with a financial adviser or accountant to assess its current financial situation, its needs and the options available.Close Answer
- Q:What is a viable business?
A viable business is a business that is currently in operation and has a realistic expectation of continued trading to remain trading for the foreseeable future.Close Answer
- Q:How do lenders assess viability?
Each lender makes its own assessment of business viability but key characteristics of viable businesses include:
Trading history - A history of successful trading and profit and/or cash generation – typically demonstrated by financial accounts of the business.
Future cash and profits - Realistic cashflow projections and business plans based on realistic assumptions for the business and the sector it in which it operates in, that demonstrate the potential for continued trading and cash/profit generation for the foreseeable future, and demonstrate the business is expected to generate enough cash to make repayments as they fall due. This is particularly important for start-ups, which do not have trading histories. Short-term cashflow projections (i.e. 6-12 months) are of particular importance in the current environment.
Business model - A management team that has adjusted its business model and cost structure to the prevailing business climate. For start-ups, the business plan should reflect current trading conditions and show how the business will cope with and trade through them.
Credit history - A borrower should ideally have a good credit history over the previous three to five years and making payments to creditors and the Revenue Commissioners as required. For start-ups, this may relate to the promoter’s personal credit/financial history or any previous business ventures in which they have been involved.
Solvency - An ability to show that the business is capable of maintaining or returning to solvency within a reasonable timeframe.Close Answer
- Q:I hear a lot of references to SMEs. What is an SME?
An SME (small and medium-sized enterprise) is the internationally accepted term for a small business. It is an important term because some State and EU aids and supports are limited to SMEs. The European Commission (EC) has defined an SME as enterprises with fewer than 250 employees of no more than €50 million or a balance sheet value no more than €43 million. For more details on the European Union definition of SMEs, please visit the EC website here. The EC defines a small business as an enterprise with fewer than 50 employees but all businesses are welcome to use this website.Close Answer
- Q:My bank won’t give me credit – what are my options?
If you have applied for credit and you have been declined or if your bank has changed or withdrawn you credit, you should ask the bank to explain why this has happened. Under the Code of Conduct for Lending to Small and Medium Enterprises, a bank must clearly explain the reason for any application decline or credit withdrawal/change.
If you are not happy with the reason given, you should appeal the decision to the bank either by using their internal appeals process or by making a complaint.
The Credit Review Office will also look at cases of where credit is refused, withdrawal or reduced for customers of and applicants to participating banks.
For more details about the Credit Review Office, please visit the Credit Review Office website here.Close Answer
- Q:I have heard about EU funding available for businesses – how can I access this?
EU funding is provided directly by the European Commission (EC) and indirectly by the European Investment Bank Group. The EC mainly offers grants for research and innovation, while the European Investment Bank Group provides loans, venture capital funding and loan guarantees through partners such as banks, venture capital companies and other organizations.
For more information on EU funding for investment, please click here.
For more information on EU funding for innovation, please click here.Close Answer
- Q:How do I apply for a loan?
Banks and non-banks provide a range of credit financing options for business. How a business uses credit depends on a number of factors including its stage of development, trading history, financial status and how it plans to use the credit.
New businesses should consider the full range of credit options and consult with a professional financial adviser to decide solution best meet its needs.
Banks must follow a code set out by the Central Bank of Ireland in relation to lending called the Code of Conduct for Business Lending to Small and Medium Enterprises (SME Code). The Code addresses a range of issues related to bank lending including applications for credit. A bank must inform an applicant how long the process is likely to take. The Code was recently updated by the Central Bank with additional provisions regarding small businesses in financial difficulties. This revised Code will take effect from January 2012.
For more infomration on the types of credit available to businesses and the loan application process, please click here.Close Answer
- Q:What government financing or support is available?
A range of government financial supports are available for businesses. These mainly includes grants and equity investments, as well as tax and other incentives.
For an overview of government supports for start-ups, please click here.
Government supports are also available for investing in the business (click here for more details), innovation and R&D (click here for more details) and developing business overseas (click here for more details).
A number of government agencies also provide supports for specific sectors and regions. Please click here for more details.