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Are you Talkin’ to SME?

We have spoken in the past about the dearth of financing options for Small and Medium Enterprises in Ireland following the recession. Recently, there seems to be a push towards recognising the importance of SMEs as the backbone of our economy and as such, the need for available funding to ensure their continued success.

One such form of funding of which Ireland has seen very little in recent years is ‘Peer to Peer’ (P2P) lending. The term might bring flashbacks of desperately attempting to download your favourite songs on a dial-up connection but rest assured this is a far more functional process. Peer to Peer lending is now one of the most popular methods of funding a business or idea (think Kickstarter, IndieGoGo etc. these options are also known as ‘crowdfunding’). The process allows ordinary individuals with cash to invest be ‘matched’ with a business seeking finance. The entire process is done online which reduces overhead costs and generally makes for a smoother and cheaper lending process for both parties.

One such Irish Peer-to-Peer lender, Linked Finance has recently received full authorisation by the UK’s Financial Conduct Authority (FCA) to allow the company to enter into the UK Market. Linked Finance’s CEO Niall Dorrian was quoted as saying the following about the authorisation:

“I am very pleased that we have secured full FCA approval. It puts us ahead of the curve in terms of preparing for any regulation of the sector in Ireland. It also demonstrates to lenders and borrowers here at home that Linked Finance operates to the highest standards.”

The authorisation is well timed for Linked Finance as our own Department of Finance has initiated a public consultation process with the view of imposing some regulations on Peer-to-Peer lending in Ireland, aiming to make this a safer process for all parties. The UK already has a comprehensive regulatory procedure with regard to P2P lending, and it is thought that Irish practises will begin to follow suit as P2P lending grows in popularity here. The UK also already has many options in place for funding SMEs which Ireland may eventually follow suit on given that these enterprises make up such a large chunk of our business.

Linked Finance have already facilitated more than €25m in loans to Irish SMEs and it is hoped that in the future there will be a marked increase in lending options for SMEs as they continue to be the backbone of our economy. Linked Finance in particular hope that any kind of regulation will be a help to the sector rather than a hindrance as CEO Dorrian has said:

“Any regulation of the sector in Ireland should seek to encourage, rather than inhibit, further diversification within the financial landscape.”

For now, at least, times seem to be changing positively for Irish SMEs and long may this last.

Should you have any queries or require further information on this or any other business or financial matter please don’t hesitate to contact us here at EcovisDCA’s new head office, where as always we will be delighted to help.

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DCA PARTNERSDECLAN DOLAN & EAMONN GARVEY

MORTGAGE WOES KEEP BUYERS ON THEIR TOES.

Mortgage rules have been a point of contention in Ireland for some time now and whether house prices fall or rise, it has become increasingly difficult for those hoping to gain footing on the first step of the housing ladder. Last year, mortgage rules were changed to mean that only 3.5% of income can be borrows, and there must be a 10% deposit on all mortgages up to €220,000, and a further 20% on any cost above this figure.

 

At the time of this change it was suggested that these rules would be in place for a period of a year and then re-examined. As they were put in place in February last year, all eyes will be on these rules to see if there is any change which might allow for easier purchasing. DNG have suggested that they would like to see the borrowing limit raised to 4% and the 10% deposit rule extended to €300,000 as they have seen over the past year that many people are becoming trapped by these rules and are unable to buy due to higher house prices and stricter rules.

 

It has been reported this week that we may see an even bigger shake up in the mortgage industry. An Australian lender, Pepper is reportedly set to offer new incredibly competitive mortgage rates which will target first-time buyers in particular. This arrival of a new lender is expected to push current Irish lenders into offering new lower rates in order to respond to competition and demand.

 

Already since the announcement we have seen Bank of Ireland offer a new bonus. This bonus would see them add 10% to first time buyers onto their existing deposit savings. Additionally, Bank of Ireland were already offering 2% back of every new mortgage.

 

Pepper is said to be set to offer rates as low as 3.55% for both first time buyers and those looking to switch lenders. Pepper Ireland boss Paul Doddrell has suggested that Pepper will also be first in line with offers for those who have found themselves refused by other banks, including those who are self-employed. It is suggested that Pepper will also be able to lend to those who found themselves in arrears during the financial crisis, but have now found their way back to meeting payments.

 

Whilst these new offers may not be a complete end to Irish mortgage woes as these offers will only be available through brokers, the suggestion of another adjustment of the overly tight mortgage rules will be a welcome one for many first time buyers and prospective first time buyers. It is hoped that we will see a general reduction in rates, with the onset of further competition in the Irish mortgage market. If you require assistance with your own or your company’s finances whilst hoping to gain a mortgage, please don’t hesitate to contact us here at DCA accountantswhere we are always happy to help.