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Legislative Assembly for the ACT: 2014 Week 13 Hansard (Tuesday, 25 November 2014) . . Page.. 3983 ..

Community services—microcredit program

MS PORTER: My question is to the Minister for Community Services. Minister, can you inform the Assembly of how the ACT microcredit program assists low income and vulnerable groups to establish businesses?

MR GENTLEMAN: I thank Ms Porter for her question and interest in the microcredit program. The ACT microcredit program is a partnership between the ACT government, the Lighthouse Business Innovation Centre and Westpac Bank. The program provides low-interest and fee-free loans from Westpac Bank to eligible low income earners who wish to start up or expand an existing business.

The program also provides loan recipients with business skills development, individual mentoring, peer support and access to a range of networking events through the Lighthouse Business Innovation Centre in Fyshwick. The program seeks to encourage groups such as Aboriginal and Torres Strait Islander people; migrants; young people; women; and lesbian, gay, bisexual, transgender and intersex persons to refine their ideas into a viable business opportunity.

I am pleased to inform the Assembly that, in the first six months of the program being operational, eight loan applications were received, of which six have been approved. The total amount of loans issued under the program since February 2014 is $28,000. These loans have supported a range of innovative business ideas which have included the development of a stain removal formula for high end fashion fabrics, the creation of a new publication to be distributed to Canberra cafes, providing an affordable advertising option for other businesses, and the expansion of an ethical and sustainable fashion brand.

It is important to note that the applicant’s ability to repay the loan is a key consideration. Lighthouse will not provide loan funds to anyone who is expected to experience financial difficulty in meeting the repayment obligations. Where the applicant is assessed as not being suitable to receive a loan, Lighthouse will work with the applicant to find other sources of support for their ideas and projects, and help them to further refine their business ideas.

The microcredit loans are available on a competitive basis and two forms of funding are available. They are interest-free loans of up to $3,000 with a preferred repayment period of two years for applicants with a well-developed business idea, and low interest rate loans at a flat three per cent interest rate for between $3,001 and $10,000 funding with a preferred repayment period of two years for applicants with both an existing business and a customer base. The key difference between the two types of loans is whether the applicant is in the development phase of a business idea or already has an existing business. The no-interest loan enables an idea to be tested and it provides for the purchase of essential equipment.

I am very pleased that the ACT microcredit program is supporting people in Canberra to get their business ideas off the ground and supporting the development of small, innovative businesses in our community.

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