Small firms want scheme for government-backed loans

THE FLOW of credit to small businesses will not increase because of Nama (the National Asset Management Agency), the Small Firms Association (SFA) said yesterday, urging the Government to introduce a State-backed loan guarantee scheme.

Speaking at the association’s annual conference, SFA chairman Aidan O’Boyle said a Government-backed scheme would reduce the level of risk taken on by banks and encourage more lending to the small business sector.

More than 350 delegates attended yesterday’s conference at Dublin Castle, which focused on how small businesses can exploit opportunities that have arisen from the economic slowdown.

Much of the discussion centred around the issue of public sector expenditure, with the SFA calling for a €3 billion cut in public expenditure in the December budget, €1 billion of which was to come from a reduction in “the unit cost provision of public services” through a combination of pay and pension provision decreases, and another billion from efficiency gains across the broader public sector spend.

Labour TD Ruairí Quinn said the issue of public sector reform had to be addressed. “The public service is incapable of reforming itself. Our public service is not numerically terribly large by European standards, but it’s grossly out of date in the way in which it does its business. Relative to the fleet-footed ways that small businesses have in this country, the public service is a dinosaur.”

However, Paula Fitzsimons, national co-ordinator of the Global Entrepreneurship Monitor for Ireland, said those in the private sector should not solely blame others. “A lot of us have been complacent and let our costs get out of line. We need to look at how we run our businesses, how we serve our customers, and whether, through the complacency of the Celtic Tiger, we began to take them for granted.” She said current difficulties provided an opportunity for businesses to “become lean in order to go forward and grow”.

Other speakers at the conference included Chris Horn, founder of Iona Technologies, who told delegates that Irish businesses needed to focus on exports to achieve growth. “Ireland represents only 0.06 per cent of the global market, so you have to go overseas. In contrast, UK, French, and German businesses first build their own domestic markets over a period of time and then start exporting.”

He said that accessing the international market quickly gives Irish companies a “natural advantage”, as European companies often enter the wider market two or three years too late. “Our dependence on export markets mean that we have to confront difficulties and failure quickly. If you’re going to fail it’s better to do so as soon as possible so that you can adjust your strategy.”