Government Credit Initiatives

Government Credit Initiatives

The Credit Guarantee Scheme and Microenterprise Loan Fund were launched in 2012.

Government Credit Initiatives

The Government launched two inititaives in 2012 aimed at SMEs who have been and may be declined credit by banks.

Credit Guarantee Scheme

The Credit Guarantee Scheme was launched in October 2012.

Through the three-year scheme, the Government provides a partial guarantee to banks against losses on qualifying loans to eligible SMEs.  The Credit Guarantee Scheme supports viable SMEs that do not have sufficient security or whose sector, business model or target market is considered to be high risk.  The Government guarantees 75% of each loan provided under the scheme for up to three years.  To be eligible for the scheme, SMEs must apply to a participating bank for credit in the normal manner.

Three banks currently participate in the scheme:  AIB, Bank of Ireland and Ulster Bank.  The facility is provided by the lender using its own capital and subject to its own commercial terms and pricing for the particular lending product provided.

A premium of 2% is payable to the Government.

More details on the Credit Guarantee Scheme are available from the Department of Jobs, Enterprise and Innovation (DJEI) website here.

Microenterprise Loan Fund Scheme

The Microenterprise Loan Fund Scheme was launched in September 2012.  The Fund provides loans of up to €25,000 to start-up, newly established, or growing microenterprises employing fewer than ten people, with commercially viable proposals that do not meet the conventional risk criteria applied by banks. Loans are available for start-up costs, business expansion and working capital.

To be eligible for a loan, persons must:

  • have a business plan
  • have a commercially viable proposal
  • confirm that they have been refused credit from a bank, and
  • have the capacity to repay the loan.

The Fund is managed by the Social Finance Foundation (SFF) on behalf of the Minister for Jobs, Enterprise and Innovation through a subsidiary called Microfinance Ireland. SFF was established in 2007 by the Minister for Finance, with financial support from the banking sector through the Irish Banking Federation, as a not-for-profit company to act as a wholesale supplier of funding for social finance under the Social Finance Initiative.

Microfinance Ireland assesses loan applications and manages the loan book.  It works with the County and City Enterprise Boards (CEBs) / Local Enterprise Offices which provide a range of important business supports, including advice, training and mentoring, to microenterprises.

For more information on the Microenterprise Loan Fund, please visit the DJEI website here.  For more information on the Microfinance Ireland, please visit the website here.