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First Step in Ireland, as EIF signs first guarantee agreement under the Competitiveness and Innovation Programme (CIP)

Date: 19/08/2009

EIF and First-Step Microfinance, have signed a guarantee agreement under the Competitiveness and Innovation Framework Programme (CIP) helping to provide enhanced access to finance for micro businesses in Ireland.

Micro enterprises in Ireland could now have access to over 3 million euros of additional funding guaranteed under the CIP which will help to support new entrepreneurs and create new jobs. This funding will be provided by the Social Finance Foundation.

It is expected that this new agreement will allow First-Step Microfinance to support the creation of over 600 jobs. EIF Chief Executive, Mr Pelly said “We are pleased to be working with First Step in providing access to finance to micro enterprises in Ireland.

First Step has developed this innovative approach to financing SMEs in Ireland which will help to support micro-entrepreneurs and contribute to the growth of the Irish economy.”

First-Step Microfinance offers loans to those who have difficulty accessing finance from traditional commercial banking and to this end, provides loans for the purpose of benefiting the wider community. In recognition of the challenges of setting up a new business, First-Step Microfinance also offers one-to-one coaching provided by its network of volunteers if required, therefore increasing chances of future success for micro-entrepreneurs.

Commenting on the transaction, Ms. Pauline Irwin-O’Toole Chief Operating Officer at First Step said: ”First-Step is pleased to renew its partnership with the European Investment Fund. This Guarantee will enable First-Step to provide enhanced access to finance and to mitigate a part of the risk in relation to bad debts on the loan portfolio. This intervention is both timely and crucial for small start-ups and developing businesses in Ireland in terms of job protection and job creation.”

This transaction allows the EIF to renew its cooperation with First-Step Microfinance in Ireland, following prior to a previous successful partnership under the Multiannual Programme (MAP, CIP’s predecessor). Since it’s inception, First-Step Microfinance has funded 1,500 projects and has helped to create 3,000 new jobs.

Background information

cip

The Competitiveness and Innovation Framework Programme (CIP), which spans from 2007 to 2013, has been put in place to boost European productivity, innovation capacity and sustainable growth, whilst simultaneously addressing complementary environmental concerns.

Within the framework of the CIP, the European Investment Fund (EIF) has been allocated EUR 1.1bn to be split between venture capital – with the High Growth and Innovative SME Facility (GIF) - and guarantees – with the SME Guarantee Facility (SMEG).

Under the SMEG, financial institutions are encouraged to enhance access to finance for SMEs.

The facility offers an excellent tool to allocate additional financing volumes for those SMEs that would not otherwise have access to resources and financial engineering instruments because of the increased lending risk entailed. As such, The SMEG complements and broadens EIF’s own product offering. The EU CIP SMEG Facility gives the EIF the opportunity to play an essential role in supporting sustainable job creation and entrepreneurship in European SMEs.

About First-Step Microfinance

FirstStep

First-Step Microfinance was founded in 1991 and is a private not-for-profit microfinance institution. First-Step provides interest bearing loans of up to €25,000 over a 3 year period to help job creation. Funding is targeted at people who want to start a small business and entrepreneurs who have difficulty securing finance from traditional banking sources.

About EIF

The EIF central mission is to support Europe’s SMEs by helping them to access finance. EIF designs and develops venture capital and guarantees instruments which specifically target this market segment. In this role, the EIF fosters EU objectives in support of innovation, research and development, entrepreneurship, growth, and employment. For further information, please contact David Yormesor, d.yormesor@eif.org, or visit EIF’s website www.eif.org

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