I welcome the Minister of State and his officials to the House. Before I call on the Minister of State, I welcome the former mayor of Galway, Mr. Val Hanley, and his wife Eileen to the House. You are most welcome to the Seanad Chamber today as guests of Senator Ollie Crowe and Deputy John Connolly. Thanks for coming and thanks for your work in Galway as mayor.

The debate will follow the normal pattern, with the Minister to speak for ten minutes, group spokespersons to speak for eight minutes and all other Senators for five minutes.

I welcome the opportunity to discuss the Microenterprise Loan Fund (Amendment) Bill 2024 on Second Stage. This Bill provides a clear statutory framework for transferring Microfinance Ireland, MFI, into State ownership, placing it under the aegis of the Department of Enterprise, Tourism and Employment. It does this by amending the legislation that established MFI, the Microenterprise Loan Fund Act 2012, to transfer the authorised share capital from the Social Finance Foundation, SFF, to the Minister for Enterprise, Tourism and Employment and by updating the relevant governance and accountability provisions.

Before turning to the detail of the Bill, it is helpful to outline the background to Microfinance Ireland and the context in which this legislation arises. Microfinance Ireland was established back in 2012 under the Microenterprise Loan Fund Act 2012. It provides unsecured business loans to viable small businesses that have both fewer than ten employees and an annual turnover of less than €2 million. It fills a gap in the market by lending to businesses that cannot obtain loans from other commercial lenders. Microfinance Ireland makes its loans available to both start-ups and established businesses across all sectors. The loan term is typically three years for working capital purposes and can be extended to five years for capital expenditures. Interest rates range from between 5.5% for clients of local enterprise offices, LEOs, to 6.5% for direct applications.

Many early-stage and small businesses face significant barriers such as limited collateral, insufficient credit history, previous credit difficulties or higher risk profiles. This gap is particularly pronounced for start-ups, a significant proportion of which use MFI finance to establish themselves and subsequently grow into larger, sustainable enterprises. MFI’s agility has been particularly important during moments of national challenge. In the early days of the Covid-19 pandemic, MFI rapidly introduced dedicated liquidity loans before many State supports were in place. In late 2023, following severe flooding and weather events, it once again responded within days when called upon by my Department.

In 2024, in response to rising costs and evolving business needs, we increased the permitted limit for an MFI loan from €25,000 to €50,000. The impact has been significant. We have seen loan approvals rise by 55% compared with the same period last year, which is a clear sign these supports are making a real difference in our communities. MFI also offers structured post-approval mentoring to its borrowers through the nationwide LEO network. This support is provided at no additional cost to approved applicants and helps to strengthen the long-term resilience and sustainability of small businesses.

Since its establishment, MFI has proven to be an effective mechanism for enabling SMEs to access finance. As of September 2025, it had approved up to 6,000 loans totalling €102 million, directly supporting more than 11,800 jobs right across the country. Notably, 78% of these loans have supported businesses outside Dublin, demonstrating its vital role in balanced regional development. Microfinance Ireland has continued to expand its role as a vital source of finance for small businesses and as demand for MFI’s lending increased, it became necessary to consider whether the structures put in place back in 2012 remained appropriate. The original Act provided for MFI to operate as a subsidiary of the SFF. The SFF, created in 2007 with support from the banking sector, provided loan funding to community and social enterprises and operated under the aegis of the Department of Finance. It also provided the debt facility that supported MFI’s early lending activity, complemented by Exchequer funding.

However, the landscape in which MFI operates has changed significantly. The SFF no longer falls under the Department of Finance and no longer provides loan funding to Microfinance Ireland. Since 2021, the Strategic Banking Corporation of Ireland has taken on the role of providing a debt facility to MFI.

Furthermore, the 2020 amendments to the Microenterprise Loan Fund Act subsequently expanded MFI's financial capacity, increasing its debt fund ceiling from €25 million to €100 million and raising the permitted level of Exchequer support from €25 million to €95 million. The Minister for Enterprise, Tourism and Employment is accountable for any Exchequer funding to MFI.

With the funding model for MFI evolving and its continued expansion, the Department undertook a review of the organisation's governance arrangements to identify the most appropriate long-term structure. This review concluded that bringing MFI directly into State ownership would provide clearer accountability, stronger alignment between governance and funding, and greater certainty for the organisation's future. The Government has accepted that recommendation. Following engagement with the Department's review, SFI has agreed that MFI should transition into full State ownership. I acknowledge and thank SFI and MFI for their constructive engagement throughout this process.

The Bill proposes to amend the Microfinance Loan Fund Act 2012 to give legislative effect to MFI's transition to State ownership. The Bill updates the 2012 Act to reflect MFI's transition to full State ownership. A key part of this is the transfer of MFI's authorised share capital from the SFF to the Minister for Enterprise, Tourism and Employment. Once this transfer is complete, MFI will no longer be regarded as a subsidiary of the foundation. To give effect to this change, the Bill makes a series of technical amendments to the 2012 Act, replacing references to "the subsidiary" with "Microfinance Ireland".

Section 9 of the Bill updates the governance arrangements for MFI. While MFI already operates with many of the features you would expect in a State-supported body, the move to full State ownership means some changes are needed. At the moment, the SFF appoints the board. Under the new arrangement, the responsibility will rest with the Minister for Enterprise, Tourism and Employment, who will appoint the chairperson and the directors. The Bill will also set out the size of the board, the quorum required for meetings and the usual provisions concerning allowances, resignations and removals, as well as measures to ensure continuity during this transition.

In addition, the Bill provides for the appointment of a CEO. This CEO will be appointed by the board with the consent of the Minister. The legislation defines the terms, responsibilities and oversight arrangements for the role. The Bill also makes clear that the CEO will be accountable to the Committee of Public Accounts and the Oireachtas committee on enterprise, ensuring there is transparency in line with public sector expectations.

A further element of the Bill concerns staff pensions. Section 13 provides for the preparation of a superannuation scheme for MFI's staff which must be approved by the Minister for Enterprise, Tourism and Employment and the Minister for Public Expenditure, Infrastructure, Public Service Reform and Digitalisation. This is an important step in providing staff with appropriate protections as MFI moves to a State footing. Overall, these measures strengthen MFI's governance and ensure that the organisation has a secure and modern framework as it continues its important work.

I flag my intention to make amendments to the Bill on Committee Stage. Since the publication of the Bill, my Department has received legal advice from the Office of the Attorney General that the Bill's current provisions with respect to share transfer, governance and superannuation would benefit from some further enhancements. The additional provisions have been included in the amendments, which aim to designate the staff of MFI as public servants following its transition to public ownership and to provide transitional provisions for existing staff. The amendments aim to unequivocally establish that both current and future staff of MFI are public servants and are covered by relevant legislation. This may be a technical Bill but what it delivers is far more than technical. Every MFI loan represents real belief in an entrepreneur and a meaningful boost to local enterprise. Time and again, MFI has helped someone to protect a job, create new employment and keep a business trading. Ensuring that the framework supports this work is essential.

I acknowledge the work of the SFF and MFI. Their collaboration, insight and commitment in supporting microenterprises has been essential in shaping this legislation. The Bill secures the long-term future of MFI. It strengthens its governance and modernises the framework within which it operates. Most importantly, it ensures that the small businesses right across this country, which often face the biggest challenges, can continue to access fair, reliable and transparent finance. I commend it to this House.

I welcome the Minister of State, Deputy Dillon and his officials to the Chamber this afternoon and I also welcome my friends in the Public Gallery, Val and Eileen Hanley. I hope they have a very enjoyable afternoon.

I particularly want to welcome this Bill which, as the Minister of State has outlined, provides for Microfinance Ireland to be transferred from the remit of the Social Finance Foundation to the Minister for Enterprise, Tourism and Employment. Microfinance Ireland plays an essential role in the State support infrastructure for viable microenterprises that would otherwise not have access to loan financing from the market.

We have all spoken in this House about how important our SMEs are. They are the backbone of the economy, especially in small towns and villages across the country. Microenterprises are a hugely important part of the broader SME sector. They are the family-run bars and restaurants in towns and villages, the local cafés, or the small plumbing or carpentry businesses we all rely on. These are essential businesses that we should take every opportunity to support. Microfinance Ireland plays a unique and vital role in supporting these businesses. It provides loans to viable microenterprises that cannot access finance from traditional lenders. In many cases, these are businesses with strong ideas and real potential but without the collateral or track record that banks require. Without Microfinance Ireland, many of these businesses simply would not get off the ground.

Since it was established, Microfinance Ireland has made a real difference. Over 11,800 jobs have been sustained through microenterprise loan fund since 2012. Importantly, more than 78% of that support has gone to businesses outside Dublin. This Bill builds on that success. It provides for the transfer of Microfinance Ireland into full State ownership under the responsibility of the Minister for Enterprise, Tourism and Employment. This is a logical and timely step. When Microfinance Ireland was established, its ownership structure reflected the arrangements in place at that time. However, those arrangements have changed. The Social Finance Foundation is no longer under the remit of the Department of Finance and has indicated its wish to step back from ownership. At the same time, the State, through bodies like the Strategic Banking Corporation of Ireland, has taken on a greater role in supporting access to finance. This Bill responds to that new reality. It ensures that Microfinance Ireland will sit clearly within the State's enterprise support framework.

There are clear benefits to this change. First, it will provide stronger and more transparent governance. The Bill sets out new governance structures, including a board of directors appointed by the Minister, and clear accountability for the chief executive officer to the Committee of Public Accounts and other Oireachtas committees. That means better oversight, better accountability and, ultimately, better value for money for the taxpayer. Second, it will improve how Microfinance Ireland operates. By bringing it fully under the Department of Enterprise, Tourism and Employment, we can ensure closer alignment with other enterprise supports, particularly the local enterprise offices, which are so important. These offices already work closely with Microfinance Ireland on the ground throughout Ireland and through Galway County Council, it operates with the help of Galway City Council, helping businesses to develop and grow. This Bill will strengthen that relationship and make it easier for enterprises to access the support they need. Third, it will enhance access to finance for microenterprises. We know from the Department of Finance's SMEs credit demand survey that microenterprises find it the hardest to secure funding. This measure will help address that gap by ensuring that Microfinance Ireland can continue to provide loans on reasonable terms to businesses that are viable but underserved.

That matter is not just for the individual businesses but for jobs. When microenterprise gets the support it needs, it can start up, survive, recover, invest and grow. In doing so, it sustains employment and contributes to the local economies. The impact is particularly significant in rural communities. As I mentioned earlier, more than 78% of Microfinance Ireland lending is outside Dublin. These businesses are often key employers in smaller towns and rural villages, and these jobs are obviously not as easily replaced as they are in our bigger cities.

I welcome the Bill, which will provide clarity about the status of Microfinance Ireland, strengthen governance and ensure access to loans for viable microenterprises.

Cuirim fáilte roimh an Aire Stáit. We are supportive of the Bill. The Minister of State has outlined the critical role of Microfinance Ireland in the economic infrastructure of the State and the loans it provides to a range of small businesses. As other Senators have said, these are primarily outside of Dublin. As a rural representative, it is always encouraging when we see that level of support for rural communities.

The Minister of State referred to the increased demand for Microfinance Ireland. On the one hand, we could take that as a positive in that more small businesses are starting up and a lot more entrepreneurs are bringing their ideas forward but, on the other, is it the case that access to finance and the cost of doing business is putting more stress on people in sustaining businesses? It would be useful to get some analysis on where that increased demand has come from as the Bill progresses. I noted Senator Lynch's comments on increasing the top level of the loan available. That might be something the Government could come back to us on on later Stages of the Bill, to discuss whether that demand is about businesses starting or about them struggling.

The commitment in the programme for Government to scale up Microfinance Ireland to enable it to support greater numbers of start-ups in the future is important. Getting the right structures for Microfinance Ireland is something that is necessary. It would also be useful, perhaps on a future Stage, to examine the impact of any changes to the operation and governance of Microfinance Ireland and bring that back. It might be something we could return to on Committee Stage, to have a report back as to how the new structures are operating because, obviously, we all agree it is a critical part of our infrastructure.

Small businesses have really been hammered over the past number of years. The Covid pandemic put a lot of small businesses out of business completely and that has been followed by the cost-of-living crisis, the increased cost of doing business and cost of materials, and now we are in a real cost-of-energy crisis as well. That originated with the Ukraine war but more recent developments in Iran have really exacerbated that. We all saw the consequences of that this week, with people out protesting at the level of supports that are not available to them, which they need. There is a real challenge and pressure on businesses and it is important that when we look at this particular exercise, we are also mindful of the broader ecosystem in regard to issues that affect the economy, particularly for those who are smallest in the economic model, who are the ones who suffer the most stress in that regard.

There has long been a recognition that the economic model in this State is heavily reliant on large foreign direct investment, which comprises a small number of businesses in a small number of sectors. There is a real need to rebalance, to have more diversity across the economy and to have more indigenous business supported and developed, not just in developing at the beginning but also into growth and exports and into more substantial international businesses from Ireland. This is a way to assist the beginning of that.

I would like to see a real focus from the Government, in doing that, on recognising the volatility of having a lot of the economic capital in a very small and narrow sector. If it is run in the way we all wish to see it run, if it supports the businesses that need to be supported to get started up and if it provides diversity in the economy, then it can do a significant job in the long-term economic future. We will be supporting the Bill. There are a couple of issues that we will come back to at a later stage.

Before I call the Minister of State, I welcome guests of Senator Pat Casey, the Haugh family from Limerick, Kay, Lisa, Fiona and Gerry. You are most welcome to Seanad Éireann. Thanks for coming in today. I hope you enjoy your time in Leinster House.

I also welcome all our guests in the Gallery.

Normally when a group comes in from a school, there is no homework. I ask the Minister to let them know that there is no homework for the rest of the week.

To keep with tradition, we would love if your teachers could afford you the opportunity of having no homework today.

No, it is for the rest of the week.

For the rest of the week, which is even better again.

I thank all the Senators who have contributed to this debate and for their constructive and positive tone in regards to the transfer of Microfinance Ireland into State ownership. Many Senators have outlined the vital role the organisation plays in supporting small businesses with the challenges that many of them have when starting out through assessing their financial model and ensuring they have access to capital when it is required in order that they can bring ideas, determination and talent to the next stage of their business journey. That is essentially what we are all trying to achieve in this Bill.

To Senator Lynch's point on a review of the current €50,000 limit, we will certainly keep that under consideration and review and assess the appropriateness of responding to the needs of businesses. It is important that when this organisation is set up its board and CEO will be accountable to the Oireachtas and the Committee on Enterprise, Tourism and Employment and there will be exchanges on what we are hearing in our communities, through the different chambers of commerce and business organisations, about the appropriateness of that limit. We can discuss this further as the Bill progresses.

As I said earlier, the measures in the Bill place Microfinance Ireland on a more secure and sustainable footing for the years ahead. Bringing the organisation into State ownership will ensure a clearer alignment with the wider enterprise support system and strengthen its collaboration with the local enterprise offices. That is important because we know that when many businesses start up they engage with the local enterprise offices, which have a local reach in our towns and villages. The LEOs also give free advice which will now be even more structured. They play a central role in supporting small businesses in our localities.

By establishing the foundations through this Bill, we are enabling Microfinance Ireland to expand its capacity, extend its reach and continue to be responsive to needs and demands right across our economy. The Bill will also ensure that microenterprises that rely on Microfinance Ireland can continue to access essential finance when it is most needed. We have seen significant results in regard to Microfinance Ireland. Over 6,000 loans have been approved and over 11,800 jobs supported, with grants of over €102 million already distributed.

I look forward to Senators' continued engagement as the Bill progresses to Committee Stage. I thank them again for their contributions.

When is it proposed to take Committee Stage?

Next Tuesday.

Is that agreed? Agreed.