In the wake of corporate scandals at companies such as Parmalat, Enron and WorldCom, business executives don't have the loftiest reputations these days.

Mr John Cranfield, chief executive of Dublin-based non-profit company First Step, is doing his part to change that.

First Step provides microfinance, defined by the European Union as loans of €25,000 or less, to individuals who are unable to obtain funding through traditional financial channels in order to start their own businesses.

Since its inception in 1991, First Step, whose mission is the "creation of enterprise through self-employment", has provided more than 1,400 non-secured loans worth more than €7 million for businesses ranging from aromatherapy to wine importation to the manufacturing of refuse sacks.

Mr Cranfield estimates the company has created about 3,000 jobs.

"Every lending institution provides small loans, but we are the only institution in the Republic that is purely providing microfinancing," Mr Cranfield says.

"We are not in competition with anybody," he says. "We are complementary to other institutions that are not in a position to get into the market that we're in."

The idea of microfinance, also known as microcredit, began in 1976 with Grameen Bank in Bangladesh.

Economics professor Mr Muhammad Yunus lent out the equivalent of $26 to 62 workers, who used the money to buy a day's materials to weave chairs and make pots.

At the end of the day, the workers had sold their products and soon repaid their loans, and a new concept was born.

Microfinance can refer to providing any type of financial services, including savings accounts and insurance, though First Step focuses entirely on loans.

The concept has some powerful advocates. United Nations secretary general Mr Kofi Annan has proclaimed 2005 as "the International Year of Microcredit".

"Sustainable access to microfinance helps alleviate poverty by generating income, creating jobs, allowing children to go to school, enabling families to obtain healthcare, and empowering people to make the choices that best serve their needs," Mr Annan said in a press release.

First Step got its start at a private function when Mr Cranfield and a group of friends were discussing the Republic's economic condition.

"We were talking about the unemployment situation in Ireland at the time, which was about 17 per cent, and we decided we'd do something about it," Mr Cranfield says.

Prospective clients are often referred to First Step through its loan partners, which include the Bank of Ireland and the Department of Social, Community and Family Affairs.

After a potential client draws up his or her business plan, First Step interviews the person to determine the plan's viability.

Mr Cranfield says First Step receives about 300 applications per year and approves about half of them, with an average loan of around €7,000 repayable over a three-year period.

If approved - a process Mr Cranfield says usually takes no more than three weeks - First Step provides the funding and connects the client with a mentor, one of about 300 volunteers who provide advice and guidance to the new business owner.

Despite dealing with high-risk individuals who usually don't have a solid financial history, First Step takes no third-party guarantees and charges no interest.

The company charges its borrowers only an administration fee, which is the equivalent of one or two months payment.

Only 5-6 per cent of borrowers default.

"Bearing in mind the sector we're in, the level of write-offs is minuscule," Mr Cranfield says.

Smock, a Temple Bar fashion boutique, is a First Step client that has translated its loan into a successful business.

In August 2001, the company, founded by Ms Karen Crawford and Ms Susan O'Connell, received a loan from First Step with a matching contribution from the Bank of Ireland.

Ms Crawford describes First Step's staff as "very amicable" and says obtaining the loan was much less of a hassle than she expected.

"We were going 'God, that wasn't as difficult as we thought it would be'," she says.

First Step's business model is about to change, however, as the company begins its affiliation with the EU-sponsored European Investment Fund (EIF).

The EIF has been set up to help lenders in the microfinance arena by providing loan guarantees to designated intermediaries throughout the EU.

As part of its agreement with the EIF, First Step will soon begin charging interest on most of its loans, although not on loans partnered with the Department of Social, Community and Family Affairs.

The EIF "wants microfinance operators to be sustainable, and they don't want them relying on third parties at the end of the year to be bridging the gap," Mr Cranfield says.

Currently, as a non-profit company, First Step often meets its expenses via funding from the corporate sector, its partners and the Government.

First Step is one of the founding members of the European Microfinance Network, a group of 22 firms whose objectives include promoting awareness of microfinancing and finding sources of funding.

The group will be holding a board meeting in Dublin on April 28th and 29th to coincide with the Republic holding the EU presidency.

Mr Cranfield says First Step will continue to be guided by the principle that "if anybody wants to start their own business and it's a sustainable idea, they should have access to the funding."