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When Microfinance Ireland (MFI) was set up in late 2012, the aim was to help businesses start up and expand, and support jobs following the financial crisis. The arrival of COVID-19 feels like MFI has gone full circle: it is supporting businesses again through what has emerged as a very sudden and serious economic shock and downturn.

The suddenness of the economic impact has taken everyone by surprise. Almost overnight, most businesses have seen their business volumes drastically reduce or temporarily close altogether. For the past month, MFI has been proactive in putting a range of supports in place to help
microenterprises who are struggling due to COVID-19 and the necessary public health steps taken to curb the virus.

Repayment Moratorium

Microfinance Ireland’s CEO Garrett Stokes (pictured) explains how MFI can help. “For many of our existing customers, we have offered them a six-month moratorium on repayments and have also extended the loan term by six months,” says Stokes.

"This means that our customers do not have to worry about repayments while their business is closed and preparing to open again in a few months’ time. If this is not sufficient support for the business, we will also consider additional lending up to a total borrowing limit of €50,000, to support their current cashflow needs.”

COVID-19 Loan

For new customers, the new COVID-19 Business Loan from Microfinance Ireland allows businesses that were viable before the pandemic, have been negatively impacted by at least 15% of turnover or profit, and that cannot get bank funding, to apply for financial support.

“We are offering loans up to €50,000 over a term of 36 months, which includes a six-month interest-free and repayment-free moratorium at the start of the loan period, with the loan then paid off over the remaining 30 months,” says Stokes. “This is a very attractive offer and should enable many viable businesses to help cover various overheads and expenses during the pandemic.”

In Association with

MFI is also encouraging businesses to leverage the various financial supports that have been introduced recently from Enterprise Ireland, the SBCI and Local Enterprise Offices with a view to riding the storm. Businesses should also identify all the other potential government supports available, as well as speaking to their bank/other lenders, to discuss the options for alternative payment arrangements on their existing debt.

Cashflow Planning

While it can be difficult at this particular time, businesses also need to consider their working capital position in the longer term and particularly for when the time comes to reopen their business. “The biggest challenge for all businesses is that they have no idea how long this pandemic will take to come under control,” says Stokes.

“Business owners should start planning for a situation where their business is significantly impacted for the next three to six months, but it may take a further six months before normal operations/trading performances return. The longer the period of closure, the longer the economic recovery. Determine your cashflow needs now for a number of scenarios and get facilities in place.”

Stokes adds that MFI is delighted to receive applications from eligible microenterprises in need of financial support. “One of the main determinants of whether we can support you will be the viability of the business before COVID-19 and therefore your ability to recover.

“Some sectors will be more badly hit, particularly those with seasonable turnover, where the season is missed, but we will assess all applications in a fair and supportive manner. Our mandate is to support the economy, small businesses and jobs, and we are needed now more than ever.”

For more information, go to microfinanceireland.ie/loanpackages/covid19/