Quarter of small firms getting State loans since 2012 ceased trading

Spending review finds uptake of Covid Credit Guarantee Scheme is just 14%

Almost a quarter of firms that received funding from Microfinance Ireland (MFI) over the past decade have ceased trading, according to a spending review carried out by the Department of Public Expenditure.

MFI was established to deliver the Government’s Microenterprise Loan Fund. It works closely with Local Enterprise Offices to provide loans to small businesses.

The Department of Public Expenditure published a series of spending reviews on Thursday, which included an analysis of the impact of Covid-19 on State supported lending.

As part of the review, the department said 3,364 firms were approved for MFI loans between 2012 and March 2021. Some 45 of these availed of a second loan, and in total almost €55.5 million was drawdown in lending under the scheme.


A portion of firms were recorded as having no employees. The review said this category reflected firms which have, as of the most recent 2019 MFI customer survey, ceased trading. To date, a total of 770 firms, or 22.8 per cent of all 3,364 businesses, have ceased trading.

Employment levels

The 2019 survey shows that, of the 2,385 firms to avail of MFI from 2017 onwards, 168 (7 per cent) reported having a lower number of staff and 394 (16.5 per cent) reported having higher staffing levels. Of firms which continued trading, the overall net difference in employment was 226 jobs.

The review found that much of the lending occurred following the onset of the pandemic, with €26.4 million (46.8 per cent) across 1,207 (35.8 per cent) firms occurring from 2020 onwards.

The average loan size across the entire span of the scheme was €16,793. However, from 2020 onwards, the average loan size was significantly larger at €21,912.

A similar pattern was observed in MFI take-up when compared to the various State guarantee schemes, with a large increase in scheme uptake occurring after the onset of the pandemic.

Sanctioned lending

More generally, the review established that 2020 and 2021 have seen “higher levels of demand than previous years” for State-supported lending, particularly through the Covid Credit Guarantee Scheme (CCGS), which is the largest such scheme in the history of the State.

As of May 2021, just 14.1 per cent of the €2 billion allocation had been utilised. As of August 5th, the CCGS has seen a total of 6,234 drawdowns for a combined €403.2 million in sanctioned lending.

However, the review noted that the headline allocation figure “is not necessarily an appropriate benchmark by which to assess scheme demand or effectiveness”.

It said the uptake to date “may simply be a sign that the headline allocation was too large”, and added that there was international evidence to support this conclusion.

Colin Gleeson

Colin Gleeson

Colin Gleeson is an Irish Times reporter