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Government under fire as business 'restart grant' not up and running, two weeks in

ISME says businesses are ‘bleeding out cash’.

Image: Shutterstock/antoniodiaz

MORE THAN TEN days after the government announced a commercial rates waiver and  ‘restart grants’ of up to a €10,000 for businesses, the scheme is not yet in place. 

Businesses who were forced to cease trading and others affected adversely from Covid-19 had been calling on the government to provide supports immediately to help them deal with the unprecedented crisis. 

On 2 May, Business Minister Heather Humphreys, Housing Minister Eoghan Murphy and Finance Minister Paschal Donohoe announced a “restart grant” for micro and small businesses based on a rates/waiver rebate from 2019 up to the value of €10,000.

However, businesses in dire need of a cash-flow injection have been found wanting when inquiring about the money.

When asked when the scheme would be in place, the Department of Housing, Planning and Local Government said in a statement:

The scheme will be up and running as soon as possible.

The department added:

The technical details of the scheme, and how the fund will be administered, will be developed in the coming weeks by this Department, the Department of Business, Enterprise and Innovation, and the Department of Public Expenditure and Reform.

At the time of the rebate announcement, Humphreys said the measure “will help to improve cash flow amongst our SMEs”.

The Department of Business said in a statement that the ‘restart’ fund will be a “critically important tool to support small businesses to reopen their doors and get back on their feet”.

“The scheme will provide funding to enable small and micro business reconnect with their employees and customer base by helping to defray ongoing fixed costs and the costs associated with re-launching the business.

“At this point, the number of likely applications has not yet been ascertained. That will, of course, be influenced by the final design and eligibility criteria under the scheme.”

The department added that officials are working to ensure that the “most appropriate and effective mechanism is used, meaning the system which will allow the largest amount of eligible businesses to benefit in a manner timely enough to assist with their re-opening costs”.

However, businesses have said the scheme has been too slow to materialise and is not a high enough grant aid to keep the doors open in some cases.

One business owner told TheJournal.ie that they were shocked when they called their local authority about the rates rebate only to be told they had no details about how the scheme would be operating.

“Businesses need cash-flow now. Not in a few weeks time,” they said, adding that the headline figure that businesses will get €10,000 is not the case. The rebate is the value of the rates paid last year, with many businesses paying as little as €1,500 in some cases.

“That is all that business will be entitled to. That is hardly enough to keep the lights on in some businesses,” they said, adding that in other countries such as the UK offering cash-flow loans and grants in a matter of days, not weeks.

Neil McDonnell, Chief Executive of ISME, has said the pace of movement is far too slow, stating the response does not recognise how quickly SMEs are bleeding out cash.

“Compared to the aggressively generous approach taken by the British, German, Danish, Swiss and French governments, we are surprised at how small the measures put in place by our Government are.

“We understand that resources are finite, but the question is not how much the Government can afford in bailing out the SME sector; the question is how much of the enormous revenues generated from the SME sector the Exchequer can afford to lose,” said McDonnell.

He said there is no sense in ‘providing’ this liquidity if it’s not getting to market, stating that there has been a funding failure when you look at the number of applications received and processed by the government to date.

The Covid-19 Working Capital Scheme, which provides working capital loans to Covid-19-impacted businesses has a funding pot of €200m, however, as of last week 2,127 applications were received, 1,834 have been deemed eligible, but only 156 loans have been approved.

The Covid-19 loan Microfinance loan provides loans to micro-enterprises that do not meet the conventional risk criteria of banks loans of up to €50,000. A total of 398 applications have been received but only 245 have been processed.

The Sustaining Enterprise Fund of €180 million is provided by Enterprise Ireland and the IDA. The purpose of the fund is to sustain companies who have been impacted by a 15% or greater reduction in actual or projected turnover or profit, and/or have a significant increase in costs as a result of the Covid-19 outbreak. 

Only five applications for that fund were received as of last week.

The Online Retail Scheme of €2 million was launched on 29 April to support companies in the indigenous retail sector with a pre-existing online presence to respond to the Covid-19 crisis. No applications have been received to date.

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Fianna Fáil’s Robert Troy said supports to-date are wholly inadequate and pale into insignificance in comparison with other EU states.

He said the only ‘grant’ being given by the government is in the form of the commercial rates rebate, which he is said is not €10,000 for most businesses. 

“The only other form of help from the government is in the form of debt,” said Troy. 

He said the interest rates for the Irish government loans are too high, citing the Microfinance loan having an interest rate of between 4.5% and 5.5%.

In comparison, the UK government is offering businesses from all sectors a ‘bounce back loan’ with an interest rate fixed at 2.5%. No personal guarantees are allowed on the loans and businesses can apply to borrow up to 25% of their turnover up to a maximum of £50,000.

Troy asked why the Irish government, which is borrowing at much lower rates, is not passing on better interest rates to struggling businesses. 

“The government is not going far enough,” he said, adding that smaller businesses which employ fewer than ten people, have “no appetite” to take on more debt. 

“If a business does not know if they will be open in a few weeks time, why would they sign up for more loans, loans that could result in personal guarantees being called in. The would rather walk away,” said Troy. 

The Longford-Westmeath TD said he plans to raise the issues with Minister Humphreys on Thursday. He said the government needs to ask where is it going to fill the gap both from an employment point of view and taxation shortfalls if small and medium businesses close their doors.

The Department of Housing, Planning and Local Government said in a statement that from 27 March, for a three-month period a commercial waiver is in place, with an estimated cost of €260m to be met by the Exchequer.

The department said it is currently working on the details of the three-month rates waiver in conjunction with the Local Government sector.

“The announcement of the measure was made in advance of the final details in order to give some certainty to those businesses forced to close,” said the statement.

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