Looking at the Big Picture for SMEs

As you know, we here at EcovisDCA are massive supporters of the SME (Small and Medium Enterprises) community in Ireland. The businesses were some of the hardest hit by the economic downturn, and remain affected despite continued recovery. Funding for SMEs has been relatively slow to make a return to the market and in recent weeks we have discussed some new options coming to the market for these types of business. This week, we return with even more good news in the SME market.

The ISIF (Ireland Strategic Investment Fund), an economic stimulus vehicle is set to join forces with AIB and Bank of Ireland as a backer for a new investment fund targeting Irish SMEs. This venture will be managed by BGF, a private UK company with a wealth of British lenders at its disposal. This UK-based company will now have an Irish branch for this purpose and will have a dedicated Irish team based in Dublin.

The idea behind this investment endeavour is to allow Irish SMEs access to a longer term funding and investment than would be ordinarily available, whilst also giving managers access to expertise from their investor. This will allow these companies to expand and scale up their operations whilst having the financial back up, and advice on hand.

Investments will initially be available of between €2m and €10m in exchange for minority stake in the business in question, it is planned that additional funding will then be available from the investing company. Qualifying businesses will have revenues between €5m and €100m per year.

Should you require any help or guidance on any small, medium, or indeed large enterprise, please don’t hesitate to get in touch with us here at Ecovis DCA where we will be happy to help.

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A topic we touch on quite regularly is Irish Small and Medium Enterprises (SMEs). These are a continuing topic due to the fact that SMEs are fast becoming a backbone of Irish business and employment, with them accounting for over half of all employment in Ireland. Recently we have spoken about the trials and tribulations of gaining adequate financing as an SME in Ireland, and today we have some welcome news to share on that front. A UK finance firm called BMS which was set up in 2005 has recently launched a €30m debt fund targeting SMEs in Ireland. This firm will charge interest rates of between 12 and 15% to Irish SMEs.

BMS Finance Ireland is backed by the Ireland Strategic Investment Fund (ISIF) and will focus primarily on those SMEs we have spoken about previously, those who have been unsuccessful in gaining funding through the traditional means (in Ireland, these would be primarily the banks). Director of the firm, Shane Lanigan has said of the fund “You see a lot of alternative funders, crowd-funders for example in the market up to around €500,000 and then the banks will start playing when they’re looking for €5m plus, but €1-3m is the most difficult gap in the market for SMEs to finance.” Thus, BMS will seek to fill in this gap for the SME market, allowing more growth and opportunity in this vital sector.

The rates from BMS Finance Ireland start at more than double the highest average rate being offered to SMEs by banks, which will give these companies a greater starting point from which to expand. The fund will be available to all sectors apart from the property sector. BMS Finance Ireland has said that their primary focus will be on entrepreneurs and owner-managed businesses, having already begun financing by investing in two companies. The firm is also looking toward opening an office in Dublin in the coming months which will be a welcome influx of job opportunities in itself for the city.

Going forward BMS Finance Ireland will be looking to integrate into the Irish market and greatly increase their lending potential and the range of lending they can offer. Hopefully this state-backed lending initiative will be the beginning of a new era of success for Irish small and medium enterprises.

Should you require any guidance or assistance with your own business or financial matters, please do not hesitate to contact us here at DCA Accountants where we will be delighted to assist in any way we can.

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