Alternative sources of finance

There are other sources of finance, apart from bank finance, to help businesses start-up or grow. Some of the key sources are summarised below.

Equity

Equity is the business promoter's own investment in their business. It is important for many reasons. In particular, financers of and investors in business generally like to see a business promoter investing their own money in their business. It shows the promoter's commitment to their business and reduces the overall level of bank debt needed to kick-start the business and to facilitate future growth.

Grants

Support for SMEs is at the heart of government policy. This support is provided through access to business consultancy/advice and the provision of grants. Grants are available for many initiatives including supporting feasibility studies, employment, research & development, training and marketing. The principle national grant aiding authorities are:

• Enterprise Ireland - supporting the development of businesses which normally employ greater than 10 people
• Shannon Development - helping tourist and other businesses in the greater Shannon region
• Údarás Na Gaeltachta - promoting businesses in the Gaeltacht areas
• City & County Enterprise Boards - fostering early stage businesses employing less than 10 people in local and regional areas.

More information on the types of businesses that can apply for grants and how to apply can be found on the website for each of the above organisations.

Venture Capital

Venture capital is the provision of third party funds in exchange for a percentage ownership of the business. The availability of venture capital for Irish business has been greatly enhanced in recent years with a selection of funds investing in all types of sectors.

AIB provides seed venture capital for early stage businesses through the AIB Seed Capital Fund which, like most venture capital funds, is managed externally to the Bank. The Fund has a total of EUR30m under management, with AIB and Enterprise Ireland both committing EUR15m. It is managed by experienced managers with extensive expertise in making seed and early stage investments, adding value and facilitating business success. The Fund managers are empowered to make seed investments of up to approximately EUR500,000. Furthermore, the Fund has the capacity to make investments in later rounds to support the continued growth of investee companies.

You can find information on the main providers through the Irish Venture Capital Association.

Business Angels
Business Angels are private investors who invest smaller amounts of finance. A national Business Angel Partnership network was recently set up to bring together the private equity activities of Enterprise Ireland, InterTrade Ireland and the Irish Business and Innovation Centres by matching private investors with pre-screened investment opportunities in start-up, early stage and developing businesses. More information on business angels is available at www.businessangels.ie

Revenue Commissioners

The Seed Capital Scheme (SCS) and the Business Expansion Scheme (BES) are tax relief incentive schemes. The BES provides tax relief for investment in certain corporate trades, while the SCS provides for a refund of tax already paid by an individual, when that individual sets up and takes employment in a new qualifying business. For more information visit www.revenue.ie

Social Finance

In 2007 AIB along with 11 other financial institutions contributed EUR25m in total to create the Social Finance Foundation Fund. The main focus for social finance lending is on community-based projects, social infrastructure and local development. It also supports micro-finance and very small businesses to set up, where they are unable to access the mainstream financial system and the promoters are currently unemployed and trying to get back into full time employment. For more details on the types of projects being financed and the social lending organisations administering the fund, visit the Social Finance Foundation's website.

For a comprehensive directory on all the various support packages available to Irish businesses visit the Government's website Business Access to State Information and Services (BASIS).

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