New COVID-19 Business Loan Scheme announced by MFI

Microfinance Ireland (MFI), has opened applications for loans of up to €25,000 for companies with 10 employees or fewer who have been impacted by Covid-19.

The COVID-19 Business Loan from the not-for-profit lender is a government initiative to support small businesses through the current challenges. The MFI loan is targeted at those businesses who have suffered a reduction of 15% or more in turnover or profit, and who are unable to secure finance from banks and commercial lending providers. Any business (Sole Trader, Partnership or Limited Company) with less than 10 employees and annual turnover of up to €2m and was trading prior to the coronavirus pandemic in Ireland is eligible to apply.

The finance products main features are:

  • Business Loans from €5,000 to €25,000
  • First 6 months – 0% interest and zero repayments
  • Repayments will commence in month 7 for the remaining period of the loan.
  • Government rebate for the interest paid in the following 6 months (months 7-12 of the loan)
  • Interest rate after the first 6 months will be: a reduced interest rate of 4.5% APR if submitted through the Local Enterprise Office Network (or other referral partners) or 5.5% APR if applied for directly.
  • Loan terms typically up to 3 years.
  • No fees or charges.
  • Fixed repayments with no penalty for early repayment.

In addition, existing MFI customers can apply for up to €25,000, in addition to current borrowings subject to a maximum credit exposure of €50,000. It is also worth noting that the Government rebate of the equivalent of 6 months interest will be refunded automatically, directly to the borrower’s bank account, in Month 13 of the loan period. This interest rebate will only be made if the full 6 repayments including interest have been made in the previous 6 months. No interest rebate is payable if this condition is not met.

The demand for credit at the present time to assist small businesses is high, reflecting the difficult trading position of many in the sector at present. An earlier €20m Covid-19 loan scheme from Microfinance Ireland launched in March was fully subscribed and closed in July. This initial scheme facilitated loans of up to €50,000 with some 687 businesses approved for new loans. A further 760 existing MFI customers were approved for loan moratoriums and loan restructures.

The new scheme is likely to generate a similar demand. Knowledge of where the demand is coming from, gained from the first loan scheme, is likely to assist MFI in meeting the needs of new clients. Those interested in applying can contact a Business Advisor in their Local Enterprise Office or register on MFI’s website at www.microfinanceireland.ie/covid19. MFI also have a useful question and answer sheet on their website to address further questions. Existing MFI customers seeking further support can contact MFI directly.