Microfinance Ireland (MFI) will cut its lending rate by 1% for all new lending from July 1. MFI is a government funded not-for-profit lender to micro-enterprises.

The lender also announced today that it is partnering with the network of Local Enterprise Offices to launch a support programme offering expert mentoring assistance to MFI-approved loan applicants, as required. The mentoring will be provided through LEOs.

Micro-enterprises can apply for loans of between €2,000 and €25,000 through their Local Enterprise Office, or directly to MFI. From July 1, applicants seeking MFI loan finance can borrow at 6.8% APR if they go through the LEO route, which MFI argues is a highly competitive and fixed interest rate for those small businesses that are currently finding it difficult to access finance from traditional sources.

The standard fixed rate of 7.8% APR will be applicable to businesses that apply directly to MFI and also reflects a reduction of 1% in the standard rate, from July 1.

Micro-enterprises are defined as any business with less than ten employees and annual turnover of less than €2m.

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Garrett Stokes, the newly-appointed chief executive of MFI, said: “The interest rate cut and mentoring support will mean our business loans are now even more affordable. It also means that our clients can receive expert one-to-one mentoring through their Local Enterprise Office, greatly increasing their chances of commercial success and helping to sustain jobs in the longer term.

“Since Microfinance Ireland was set up in 2012, we have approved €14.1m in loans to 944 businesses, supporting 2,148 jobs. We’re happy to support all types of micro-businesses, helping to spread the economic recovery right across the country.”

Niall O’Donnellan, head of entrepreneurship in Enterprise Ireland, added: “I am delighted that mentoring services are now available for Microfinance Ireland clients through Local Enterprise Offices. This is a valuable support for micro-enterprises ensuring they can reach their potential.”

Also welcoming the MFI announcement was jobs minister Mary Mitchell O’Connor, who said that she wanted to create an environment for micro-enterprises to grow and develop nationwide.

She continued: “The introduction of valuable business supports available through the Local Enterprise Offices to aid small enterprises will, I am sure, increase their chances of commercial success, result in the creation and maintenance of jobs, and greatly help in improving the economy overall.”

Photo (l-r): Kieran Comerford of the Local Enterprise Offices, MFI's Deirdre Parkinson and Richard Murphy of Enterprise Ireland. (Pic: Joseph Keogh)