THE £208 million soft loan scheme for small businesses will be fully subscribed, the Department of Enterprise and Employment has confirmed.
The scheme, which was launched by the Department in 1995, closed on December 31st. It offered loans at a discounted rate to small and medium businesses. However, it was speculated that not all the monies would be dispersed.
Earlier this year, small firms lobby group ISME complained that the funding was not being released by the banks - to the end of October only £136 million had been disbursed. The problem appeared to be exacerbated when Allied Irish Bank ran advertisements last month, claiming additional monies had become available for the low cost finance scheme.
It prompted an angry response from ISME, which said the advertisements were grossly misleading. The Department of Enterprise and Employment demanded an explanation from the bank which conceded that there may have been some confusion over the advertisements.
Bank of Ireland lent out £89 million under the scheme. AIB had £79 million to disburse while Ulster Bank had £30 million and National Irish Bank, £10 million.
The money was made available to small and medium firms, including, for the first time, service firms, at 6.5 per cent over seven years. The difference between that and the commercial rate was paid by the Exchequer, the European Union and the banks themselves.
The total interest subsidy was £40 million, half of which was paid for by the Exchequer and the EU, with the banks picking up the remainder. The minimum loan was £20,000 and the maximum was £500,000.
Last night, ISME called for a new scheme to replace the fund, known as the Access to Finance Scheme. ISME chief executive Mr Frank Mulcahy said his organisation's fourth quarterly survey, released this week, had shown that 29 per cent of firms had orders, markets and production capacity which were underutilised due to lack of competitive funding.
The Department of Enterprise and Employment spokesman said another scheme would be considered, but added that no commitment could be given at this stage. He said the Access to Finance Scheme had been very successful, in partnership with the EU, bringing affordable long term finance to small and medium size companies.
"It represents a continuing shift from grants to other forms of finance," he added.
