Financing Your Business

When starting a business, one of the primary necessities any businessperson will have to consider is how to fund that business, at least until it gets off the ground. In addition to the main forms of funding that everyone would be aware of, such as self-funding, funding from family members and friends, and bank loans, there are additional financial supports available, from government and other sources, the more prominent of which will be discussed below. For further information, also see this article by the Department of Jobs, Enterprise, and Innovation.

Back to Work Enterprise Allowance and Short-Term Enterprise Allowance:

If you're currently in receipt of a social welfare payment, you may be eligible for either the Back to Work Enterprise Allowance (BTWEA), or Short-Term Enterprise Allowance (STEA). Both allowances allow you to keep your social welfare payment for a certain period of time whilst setting up your business. Both schemes are aimed at encouraging, and assisting, unemployed people into becoming self-employed.

Starting first with the Back to Work Enterprise Allowance, you may be eligible, if you are in receipt of the following payments:

Jobseeker's Allowance
Jobseeker's Benefit
One-Parent Family
Blind Pension
Disability Allowance
Carer's Allowance
Farm Assist
Invalidity Pension
Incapacity Supplement
Pre-Retirement Allowance
Widow's/Widower's or Surviving Civil Partner's (Non-Contributory) Pension
Deserted Wife's Benefit or Allowance
Prisoner's Wife's Allowance
Illness Benefit

For most of these payments, you will need to be in receipt of them for more than 12 months, though there are additional criteria in some cases, which you can view by navigating to the links below. With the Back to Work Enterprise Allowance scheme, you keep 100% of your payment for the first year, and 75% of it for the second. For further information on the Back to Work Enterprise Allowance, see here and here.

The Short-Term Enterprise Allowance is similar to the previous scheme, with the main difference being that it is open only to those in receipt of Jobseeker's Benefit, that there is no waiting period for qualification for the scheme, and that it ends when your entitlement to Jobseeker's Benefit ends (which is at either 9 or 6 months in total). For further information on the Short-Term Enterprise Allowance, see here and here.

In addition, both of these payments, come with a range of secondary benefits, such as medical cards, fuel allowance, and the Enterprise Support Grant (ESG). The ESG provides further financial support with the costs of setting up your business, up to a total of €2,500 over 24 months, provided that you're able to make a matching contribution of at least 20% towards the item or training being funded. More information can be viewed at the above links.

Business Incubators:

In addition, depending on your type of business, it may be worth looking at at the various incubator programmes around the country. Business Incubators are organizations designed to accelerate the growth and success of (generally fairly new) companies, through an array of business support resources and services that could include physical space, capital, coaching, and networking opportunities, amongst others.

For a definitive list of the various incubators that exist around the country, a good resource to refer to is Fergal Gallagher's article on the subject, written for Digital Times.

Corporate Tax Exemption:

At present (May 2014), there is a three year corporate tax exemption for new start-up companies, on trading income and certain other gains. Here you get full relief on income and gains relating to the company’s trade where total corporation tax liability in any of the first 3 accounting periods does not exceed €40,000; i.e where the net income of the company is €320,000.

In addition, there is marginal relief where the tax liability falls between €40,000 and €60,000, i.e. where the company net profit is between €320,000 and €480,000.

See here and here for more details.

Credit:

With the banks still reluctant to lend to businesses in many cases, the government has created the Microfinance Fund, and the Credit Guarantee Scheme, to help ease the financial pressures faced by Small and Medium Enterprises.

Starting first with the Microfinance Fund, the fund itself is aimed at supporting start-up, new or growing enterprises, across all sectors, with no more than 10 employees. It has €90 million at its disposal, and can offer loans of up to €25,000 to commercially viable proposals that have been turned down for credit for commercial banks. The loans themselves are made at commercial interest rates, and applicants have to demonstrate that they have been refused credit by a commercial lending institution before their application is considered. See the here and here for more details.

The Credit Guarantee Scheme, meanwhile, is designed to facilitate €450m of additional bank lending over 3 years to viable micro, small and medium enterprises, according to their blurb, in order to help them obtain the working capital and investment that they need. The Government provides the lender with a 75% guarantee for which the borrower pays a 2% premium. Target companies are those lacking adequate security for a normal commercial loan, or where bank understanding of the specialised aspects of the business environment in which they operate is limited. For further information on the Credit Guarantee Scheme, see here and here.

Enterprise Ireland:

Along with the Local Enterprise Offices, Enterprise Ireland would be one of the business support organisations that people would be most familiar with. Enterprise Ireland offer a wide range of business supports, including:

Competitive Start Fund - Focused on accelerating the growth of Life Sciences, Clean Technology, and Industrial start-up companies that have the capability to succeed in global markets.
Innovation Vouchers – Open to those that own or manage a small limited company, who have a business opportunity or problem they’d like to explore; the Innovation Voucher itself is worth €5,000. The objective of this scheme is to build links between Ireland’s public knowledge providers and small businesses in order to foster a better approach to innovation by the small business sector.
Job Expansion Fund – Provides grant support up to a maximum of €150,000 towards the recruitment of new employees. The aim of the competitive Job Expansion Fund is to assist Enterprise Ireland’s client companies in achieving enhanced growth through increased employment.
High Potential Start Up Fund (HPSU) – Designed to provide “intense support, seed and venture capital to entrepreneurs and early stage companies that are considered to have an innovative product, service or technology, and have the potential to achieve exports sales and create employment”. To qualify a company needs be headquartered in Ireland, be less than 6 years old, capable of creating 10 jobs in Ireland, and realising €1 million in sales within three to four years of starting up.
New Frontiers Entrepreneur Development Programme - Delivered at a local level by the Institutes of Technology, and aimed at providing entrepreneurs and potential entrepreneurs with a package of supports, including mentoring, incubation space and a €15,000 scholarship, to help accelerate your business development, and to equip you with the skills and contacts that you need to successfully start and grow your company.

Other grants and funding opportunities offered by Enterprise Ireland can be viewed here.

Intertrade Ireland:

For those businesses engaged in cross-border trading, InterTrade Ireland offer a number of supports, including funding and the Acumen recruitment programme, to help support them.

As ever, details can be seen here and here.

Local Enterprise Office:

Recently formed out what were previously the County and City Enterprise Boards (CCEBs), the Local Enterprise Office (LEO) is likely to be your first stop when looking for business financing or assistance from state bodies. They offer a variety of supports to assist the start-up, development and expansion of micro-enterprises, which are those companies that employing 10 or less people. The grants offered by the Local Enterprise Offices include the following:

Feasibility Grants – Available to micro-enterprises to assist with the cost of necessary pre-start up studies carried out for the purposes of assessing market demand and sustainability for a proposed product or service and examining its sustainability.
Priming Grants – Available to cover the business costs involved with starting a new business, within the first 18 months of start-up. Available not just to limited companies, but also to sole traders, partnerships, community groups that fulfil the necessary criteria.
Business Expansion and Development Grants – Made available to micro-enterprises to cover costs involved with growing and develop the business, after the initial 18 month start-up period. As with the priming grants, they’re available to sole traders, partnerships, community groups, as well as limited companies, that fulfil the necessary criteria.

JobPlus:

JobPlus is a new employer incentive which encourages employers to employ jobseekers who have been on the Live Register for over a year. The payments are made by the Department of Social Protection, monthly in arrears over a 2-year period; the employer (you) will receive €7,500 for each person recruited who has been unemployed for more than 12 months, and €10,000 for each person recruited who has been unemployed for more than 24 months. Naturally there are some exclusions, but it's definitely worth looking into for anyone interested in taking on staff for their new business.

Seed Capital Scheme:

One scheme that not many seem to know about is the Revenue's Seed Capital Scheme (SCS). Here, the Office of the Revenue Commissioner's provide a refund of tax already paid by a specified individual, when that individual makes a relevant investment in a qualifying company (some types of business such as professional services, financing activities, developing land, etc. are excluded). The relief from income tax may be claimed up to a maximum overall investment of €100,000, and you can select the tax years for which you may claim refunds from any or all of the six years prior to the year of investment.

For more information, and the full terms, see here.

Údarás na Gaeltachta:

For those living in the Gaeltacht region, Údarás na Gaeltachta can provide assistance in the form of either capital or employment grants to enterprises seeking aid for an initial investment. It may also provide grants for job creation linked to an initial investment for projects in the Gaeltacht.

Venture Capital:

Finally, for those with high-potential start-ups, venture capital funding may be an option. The first port of call for these companies would likely be Enterprise Ireland’s High Potential Start Up Fund (HPSU), listed above. Beyond Enterprise Ireland itself, some other seed capital schemes and providers for Irish companies are listed here.

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