Invest NI is seeking approval to launch a £50m loan fund for small and medium enterprises.
The scheme has to be approved by the Financial Services Authority before it can go live – which is hoped will happen by early next year.
The agency wants to address a growing problem of SMEs’ accessing funds. Figures produced by the Department of Enterprise, Trade and Investment found that SME success rates in applying for a bank loan have fallen dramatically in the past four years – from 92% in 2007, to 65% in 2010.
The decline has been steeper than in the UK as a whole, with SMEs in Northern Ireland having had more success in 2007 than their GB counterparts.
For micro-business, access to bank lending has collapsed to an even worse extent. Firms with fewer than 10 employees now have only a 45% chance of getting a loan, compared with 89% in 2007. Invest NI’s initiative was welcomed by the Federation of Small Businesses. John Friel, FSB Regional Chairman, said: “Access to capital remains a key concern for many of our members. These funds will hopefully help to address this issue directly, and will indirectly also serve to increase the pressure on banks to start lending again. It is vital that small business owners gain access to the finance they need to help their businesses grow and revitalise the economy.”
The move by Invest NI follows its admission that it must return £17m in unspent funds to the Northern Ireland Executive. It is unclear whether it will be permitted to continue providing grants to inward investors beyond 2013, because of a change in EU rules. Invest NI declined to comment on the small firms loan scheme until it is approved by the FSA.