Over 1,360 Irish companies availed of the Business Expansion Scheme (BES) to grow their business, a Government survey revealed, underlining its importance as a vital funding source for SMEs, especially in the technology sector.
A Department of Finance commissioned surveyed showed that 95pc of companies that responded to its survey had raised equity under the BES in the last ten years.
Just over three-quarters of the companies surveyed raised less than €500,000 worth of equity.
However, 32pc of companies required more than €500,000 worth of equity and 28pc of them were successful in their bid.
Over 90pc of companies said that the scheme should be extended and that both the overall company limit and the individual investor limit should be increased.
Sixty-two percent of respondents saw a requirement for additional equity under the BES for their company in the next three years, 19pc felt that they would need between €1m and €2m and 10pc would want in excess of €2m.
In the last Budget, Finance Minister Brian Cowen TD doubled the ceiling of the BES scheme from €1m to €2m. In addition, the annual limit for investors was raised from its old limit of €31,750 to €150,000. The annual investor limit for the BES sister scheme, the Seed Capital Scheme, has been put at €100,000.
Cowen said that there is strong support for the continuation of the schemes from a large number of representative and other bodies in the public and private sector.
“There is a continuing need for these schemes and a strong case for extending their scope given the clear market failure in providing equity capital for small firms in their start- up and early development phase and the evidence of how vital the schemes have been in the past for such firms,” Cowen said.
By John Kennedy