Microfinance Ireland SFA BUSINESS BYTES 14TH OCTOBER MICHAEL JOHNSON, CHIEF EXECUTIVE

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1 Microfinance Ireland SFA BUSINESS BYTES 14TH OCTOBER MICHAEL JOHNSON, CHIEF EXECUTIVE

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3 Action Plan for Jobs Department of Jobs Enterprise and Innovation Initiatives for SME s Banks Credit Review Office Microfinance Ireland LEOs Partial Credit Guarantee Scheme Independent review of Bank declines Micro-Enterprise Loan Fund launched October 2012 First-Stop-Shop micro-enterprise support structure

4 Microenterprise Loan Fund Scheme Designed by Government to provide loans to newly established or growing microenterprises across all industry sectors with commercially viable proposals that do not meet the conventional risk criteria applied by commercial banks. Not intended to replace any current bank lending Banks continue to be the dominant supplier of credit Requirement for a Bank decline has been abolished and you can come directly to us if you feel we are the best option for your business

5 Definition of a Microenterprise Less than10 staff & turnover and/or Bal Sheet < 2m Estimated to account for over 90% of businesses in EU and Ireland May be a start up or an existing business

6 Loan Features Our flexible business loans are designed for micro-enterprises that, under normal lending criteria, are unable to obtain loan facilities from their bank. We provide Loan Size Term Interest Rate Security Flexible Terms Co-Funding Purpose of Loans Sectors Borrowers Loans between 2K - 25k Terms up to 5-years (3-years working capital / 5-years capex) 8.8 APR fixed interest rate (discounted by 1% for LEO referals) Unsecured Moratorium / interest only / phased drawdowns/ bullet repayments *on a case-by-case basis Co-Funding with banks welcome Working capital/purchase of equipment/set-up costs/marketing All industry sectors provided for Sole trader/partnership/limited company

7 Microfinance Ireland Supporting the Governments Action Plan for Jobs Business Activity To Date 1300 jobs supported 9m approved over 600 microenterprises 60% approval rate 60% start-up businesses / 40% existing businesses

8 Assessment Criteria MFI will assess a loan application based on a number of criteria: A realistic business plan including cash flow projections Proven business models with prospect of near term cash flow The number of new jobs and social impact An interview (may be by phone) with the entrepreneur to assess skills, character, viability of the plan and commitment to the business Adverse credit history / absence of credit history will not preclude a loan provided there if full disclosure and evidence that debts have been dealt with honourably

9 Your Business Plan There is no designated length or style for a business plan A Business Plan Should Include: Company background Market research Marketing strategy Revenue Model Financials Investment needed

10 Company Background What does your company do? What is the unique selling point? Who are the shareholders? What personal experience do you/other shareholders bring to the company? What are the company goals?

11 Marketing Research Who is your main customer base? How big is the market? What competition exists? Strategy How will you promote your business? How will you retain & acquire new customers? Revenue Generation What is your route to market? Do you have any commitments from customers? How does your revenue model work? What are the terms of payment?

12 Financials Projections of cash flow and profit What is your sales target? How much cash will this generate? What are your current borrowings/current money owed to you? What are your monthly expenses (include loan repayments)? Reasons for your projections must be held in your business plan. ( I can generate X sales because the market is Y big with an average purchase of Z units per person )

13 Useful resources for business planning Your Local Enterprise Office Enterprise Ireland Citizens Information Microfinance Ireland website: on Twitter

14 LEO & Microfinance Loan Product Loans through the LEO network get a 1% discount Application assistance for LEO clients Provision of mentoring as required Local application Pre-screening Final assessment decision and risk rests with MFI

15 Supporting Documentation Start-Up Business 1. MFI Application Form 2. Business Plan to include - - Cash flow projection (3-years) - Summary P&L (3-years) 3. Promoter(s) CV 4. 6-mts personal Bank stmts * Tax Clearance Certificate required for drawdown Existing Business In addition to 1 4: Recent Management A/Cs Latest Certified Accounts 6-mts business Bank stmts Aged Debtors/Creditors List

16 How to apply for a Microfinance Loan LEO s (Local Enterprise Office) To Avail of the 1% discount on interest rate or To get assistance with the application process: Contact your local LEO office or Direct Send completed applications with supporting documentation direct by post to Microfinance Ireland Jefferson House Eglinton Road Donnybrook Dublin 4.

17 Application forms available from: or