Businesses that have difficulty securing finance from their bank are precisely who Microfinance Ireland is there to help. MFI is a government-funded, not-for-profit lending organisation, providing loan finance to startups and existing micro-enterprises struggling to access credit elsewhere.

Business loans from €2,000 to €25,000 are available for a variety of purposes, including working capital, stock and capital expenditure. Businesses that have fewer than 10 employees, annual turnover of less than €2m and are creating/retaining a minimum of one full-time job are eligible to apply.

CEO Garrett Stokes says that borrowers don’t necessarily need to have been declined a bank loan before turning to MFI. “We support proposals that are financially excluded due to a variety of factors, including business life-stage, track record, legacy debt issues etc.”

MFI’s unsecured loans come with a fixed interest rate of 6.8% APR if a loan application is submitted through one of MFI’s referral partners i.e. Local Enterprise Offices, banks, Local Development Company and Area Partnerships. The standard rate is 7.8% APR for borrowers who apply directly to the organisation.

Microfinance Ireland recorded a strong year of growth through 2017, Stokes adds, with loan applications up by c.10%. “We only operate in the micro-enterprise end of the SME sector, and within this our biggest areas of demand were from small retailers, food services, building services and professions such as accountants.”

In Association with

MFI was awarded the European Code of Good Conduct for Microcredit Provision during 2017. It was an important award to secure, according to Stokes. “Without it, EU/EIB supports, which assist us operate, would not be available to us in the future. We are a small and relatively young company, and we’re delighted to have been one of the first four organisations in Europe to have achieved this award in 2017.

“For our customers, this award should give them the assurance that we are a well-managed organisation and are fully compliant in all aspects of our business. That includes customer services, pricing, lending practices and financial and compliance controls.”

Businesses still need to do their homework before approaching MFI for a loan. Stokes says that the most common reason for his organisation declining a loan application is inadequate cashflow to sustain the business.

“If we cannot satisfy ourselves that the market opportunity exists, the promoter has the skills to run the business and that the business is sustainable in the longer term, we will not approve a loan,” he adds. “The most important areas of attention for applicants involve researching their market and competition, being clear on their route to market and understanding the funding and cashflow risks impacting the business, such as credit days and stock management.”