Microfinance Ireland, a not-for-profit lender established by the Government to provide additional lending to small businesses, is to reduce its interest rates by 1 per cent on new loans.

From 1st July 2016, applicants seeking loans from Microfinance Ireland can borrow at 6.8 per cent APR.

The lender has also initiated a support programme to offer expert mentoring assistance to approved loan applicants

Microfinance Ireland chief executive Garrett Stokes said the interest rate cut and mentoring support will mean our business loans are now even more affordable.

“It also means that our clients can receive expert one-to-one mentoring through their Local Enterprise Office, greatly increasing their chances of commercial success and helping to sustain jobs in the longer term,” he said.

He said the lender has approved €14.1 million in loans to 944 businesses since it was set up in 2012.

However, this is significantly behind original forecasts. When it was established, it was envisaged Microfinance Ireland would approve 550 loans per annum. Furthermore, Microfinance Ireland had a medium term ambition to deliver €40 million in loans and create 3,800 jobs over a 5 year period, something which it is not on target to meet.

Microfinance Ireland recorded a 50 per cent rise in the number of applications for funding last year, and approved €5.4 million in funding to 357 businesses across the country.

Some 752 companies applied for loans last year, up 40 per cent on the 508 applications received in 2014.

The organisation offers business loans of between €2,000 and €25,000 to companies with fewer than ten employees, with a turnover less than €2 million.