A number of small Irish technology firms could face a funding crisis because of delays in the extension of business expansion schemes by the Government, a lobby group warned yesterday.
ICT Ireland, which represents firms in the technology sector, said companies had not been able to avail of the expansion schemes or the associated seed capital schemes since February 5th.
Mr Brendan Butler, director of ICT Ireland, said the situation was now becoming intolerable for some firms that had planned to raise funds through the tax relief schemes.
This delay was being accentuated by the current tough funding environment for technology companies.
Both the schemes give tax relief to investors in start-up and expanding Irish businesses and are particularly popular among small technology firms as a source of early stage funding.
The Minister for Finance, Mr McCreevy, announced plans to extend the life of the schemes until 2006 in the last Budget.
He also wants to raise the upper limit of funding to €1 million.
But a Government spokeswoman confirmed yesterday that the Mr McCreevy has not yet been able to sign a ministerial order giving effect to the extension. She said this could not occur until the expansion schemes were cleared by the European Commission.
Mr Butler said he was concerned that the European Commission was dragging its feet on the decision to approve the extension of the business schemes.
"There is a total disconnect in EU policy.
"On the one hand, they want to make Europe more competitive, while on the other they are delaying a fairly routine decision to extend a relief scheme that has already been in place," Mr Butler said.
Speaking at the SummIT 2004 conference in Dublin, Mr Joe Tynan, partner with PricewaterhouseCoopers (PwC), said business expansion schemes filled a useful gap in funding for small firms.
He said any lengthy delay to the extension of the schemes could become a big issue for small technology firms.
There was a chance that some firms could run out of money while they were waiting for the schemes to be signed off.
