Microfinance in Ireland: What you need to know
- Mark Day
- Sep 21, 2017
- 3 min read
What is microfinance?
Microfinance, sometimes called microcredit, is a banking service provided to groups of people who otherwise have limited or no access to financial lending services. The goal of microfinance is to give individuals the opportunity to become self-sufficient.
Microfinance in Ireland
Microfinance Ireland (MFI) is the primary source of microfinance in the country. It is a not-for-profit body, established by the Government to deliver its Microenterprise Loan Fund. The fund’s aim is to support start-ups and established business as they grow.
Eligible microenterprises, i.e. small businesses, must meet the following criteria:
Fewer than ten employees
Annual turnover of less than €2 million
Difficulties accessing funding from banks and other commercial lenders
Business can be a sole trader, partnership or limited company
What Microfinance is available?
Microfinance Ireland offers unsecured business loans ranging from €2,000 to €25,000 for commercially viable ventures.
Typically, the organisation’s offering is split into four Loan Packages.
Small Loan: Start-Ups and Existing Business - €2,000 to €5,000
Expansion Loan: Established Business - €5,000 to €25,000
Cashflow Loan: Existing business > 18 months - €5,000 to €25,000
Start-Up Loan: €5,000 to €25,000
Those who apply directly to Microfinance Ireland will pay interest at a standard fixed rate of 7.8% APR. However, businesses who go through their Local Enterprise Office will benefit from a 1% reduction in the standard rate, i.e. 6.8% APR.
MFI will consider applications from those who have previously been declined a loan from their bank. They base their decision on the viability of the business and its ability to repay the loan.
Where someone has already received loan funding (e.g. a grant, bank loan) but requires further funding to meet a shortfall, MFI may consider co-funding. This is provided that the loan threshold of €25,000 is not exceeded.
Loans are provided and underwritten by Microfinance Ireland and are repayable according to the terms and conditions laid out by Microfinance Ireland.
Application documents for Microfinance
Application form
Business Plan
Financial Projections (Cash Flow and Summary P&L)
Latest 6 months personal bank statements
Latest 6 months business bank statements (existing enterprises)
Irish Credit Bureau report for main promoters
Recent management accounts (existing enterprises)
Certified/Audited accounts (existing enterprises)
Current aged debtors, creditors and stock listings (existing enterprises)
Business Plan for Microfinance Application
As outlined above, you will need to produce a Business Plan as part of the application process. This will serve a number of purposes, including showing Microfinance that your business idea is viable. It will also enable you to focus on important strategic areas of the enterprise.
You will need to be able to provide details of your product or service, target markets, marketing activities and market research. Furthermore, you will need to expand on your own qualifications and experience as well as the team of people you intend to employ.
Other areas which need to be covered include pricing, competitors, competitive advantage, costs, and sales.
In addition to the written narrative, applicants will need to provide financial projections in the form of a month-by-month Cash Flow for the first 12 months and a one year Summary Profit & Loss Account.
How Irish Business Plans can help
Writing a business plan can be an onerous task. You may not be used to business writing or you may might just not have the time. Drawing up financial forecasts can often be even more daunting.
This is where we can help. Irish Business plans has several years’ experience working with individuals and companies seeking Microfinance funding. We have written plans and drawn up financial projections for people in a wide range of industries, including retail, security, health and beauty, procurement and more.
Check out our microfinance business plan writing service or get in touch to find out more.
All information correct as of September 2017.
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