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BUSINESS OWNERS ARE still digesting the government’s ‘Road Map for Reopening Society and Business’ and the package of recovery measures, announced over the bank holiday weekend.
So far, the mood music from small businesses has been broadly positive but anxiety is still palpable among owners and industry lobbyists about the future of the small and medium enterprise (SME) sector.
Georgia Visnyei employed eight people at her cafe and coffee wholesaler the Art of Coffee based in Carrick-on-Shannon, Co Leitrim.
She said that in the wake of the government’s business restrictions, ”in a matter of a few hours, 99% of our income was gone. There was no way to keep anyone on the payroll so everybody was temporarily laid off”.
“We did takeaway coffee for the first two weeks. But at the end of March when the stricter restrictions came into effect, that was the point that I decided that I’m not risking anything and to close down.”
Visnyei has since ‘pivoted’ to online sales but she is looking forward to the day when she can hire back her staff and open the cafe again. According to the government’s Road Map, this should happen on 29 June.
She said she was “delighted” with the Road Map because it allows her “to plan ahead”.
But what about the other measures announced last weekend, the government’s business recovery plan?
Headline figure
Last Saturday, finance minister Paschal Donohoe also unveiled a package with a headline figure of €6.5 billion.
Some €2 billion of this is to be made available through the Ireland Strategic Investment Fund (ISIF), the state’s sovereign wealth fund.
Only large companies that employ 250 people or more or have an annual turnover of €50 million will be able to apply for investment from the ISIF fund.
SMEs are defined as firms that employ up to 249 people. According to the most recently available data from the Central Statistics Office, they employed over 68% of the Irish workforce in 2017 and made up an overwhelming 99% of all the firms in Ireland.
Another €2 billion has been promised indirectly to SMEs through a Credit Guarantee scheme to banks.
The aim is to support below-market-interest-rate lending to small and medium enterprises for terms ranging from three months to six years. This, however, will require new legislation, which means that a new government will have to be formed before it can be rolled out.
Around €250 million has been ring-fenced for SMEs in ‘restart grants’ of up to €10,000 per business. This will be based on a commercial rates waiver for 2019.
But the €2 billion guarantee is the main provision for smaller businesses and while owners are grateful for anything they can get right now, questions remain about whether it will be enough.
Pearse Doherty / TwitterThe Grants for Buisness announced today are nowhere near the scale that is needed. With 279,601 micro and small firms in the state the average support would be less than €900.
— Pearse Doherty (@PearseDoherty) May 2, 2020
In the North the grants are £10,000 for SMEs and £25,000 for the Hospitality, Retail and Tourism sector
“It’s great that these loans are there and easy to apply for and the interest rates are supposed to be below the commercial rates. That is brilliant. But if I have to get a loan just to cover the operational costs and I have to pay interest rates on that, I still see it as a burden,” Visnyei said.
Overall, she believes that the most important thing the government can do for small businesses like hers is to ensure that “people have money”.
Visnyei explained, “Customers are worrying about how to pay their mortgage, their rent, their food. No matter if I get low-interest rates from the government, I won’t have anybody to serve.”
“What I’d like to see is that my customers have disposable income, right? So they don’t have to worry about how they pay their mortgage, their bills, their food or whatever. Because I’m in that kind of business and I need customers to treat themselves with good coffee and cakes and stuff like that.”
Business restrictions
Lee Daly is similarly agnostic about the credit guarantee.
“The focus seems to be very much on loans. Loans I think are fine. But the reality is [small businesses] are going to be accumulating debt. And at a certain point that starts to affect the viability of things. Because those debts will just become too large and businesses either need to close down, or they need to have those debts forgiven.”
Just before the business restrictions were put in place, he was getting his Brazilian jiu-jitsu gym in Dublin, Celestial BJJ, off the ground.
“I was due to move to new premises, which I had been lucky enough to get. It was pretty basic but it got us out of just running classes in a dance studio”.
Under the ‘Road Map for Reopening’, Daly won’t be able to teach another class until at least 10 August, when “close physical contact sports… can resume”.
He said that he supports this and that he doesn’t “want to open up until I can see it being the right thing to do”.
Daly is concerned about the closure of small, specialist businesses like his migh mean for the landscape of the fitness industry in Ireland if only large, cash-rich gym chains are left standing in the wake of the pandemic.
He said, “There needs to be some variety because not everybody wants to go to the gym and lift weights, you know? It’s not the right thing for everybody to do for all sorts of reasons.”
A drop in the ocean
Various business representative and lobbying groups like the Small Firms Association have also praised the recovery plan as a key first step. Some are calling for much more to be done.
Neil McDonnell is the chief executive of the Irish Small and Medium Enterprises Association (ISME), a lobbying and professional services body for the sector.
Overall, he welcomes the measures but believes that there is too much focus on debt solutions when what small firms need is cash so they can pay their creditors.
McDonnell described the €250 million figure as “an absolute drop in the ocean. It’s a decimal of a per cent of Gross National Income”.
This week, ISME and other lobbying groups, including Retail Excellence Ireland and the Restaurants Association of Ireland announced the formation of something called the SME Recovery Initiative.
Chaired by the former secretary general of the Department of Finance John Moran, the new group is calling for the government to pump €6 billion into small enterprises through “improved liquidity schemes”.
But McDonnell said that ISME has been calling for a three-pronged response to the crisis from the government for several months.
“We need a liquidity solution for the present needs of business. We need an examinership solution that works for SMEs because the current provisions in the Companies Act don’t work. And the third leg of the stool then is we need a detailed back-to-work plan.
“The only one of those that’s been delivered has been the back-to-work plan,” McDonnell said.
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Not made much money in months now self employed. Everyone in business in anxious about it. Its all uncertain how it will play out. I don’t understand why articles highlight different areas of business are worried… The hair industry, the aviation, small business, big business etc. We’re all in it… We all know, no-one is making money.
@Michael Bodycoach: don’t worry, the second you start to take in good money it’ll be gone to the Tax Man. Indeed, even if you’re not making money he’ll want his pound of flesh. I’m so sick of it I’d nearly move to Mata with Dennis and the lads.
@ThatLJD: Great country
@ThatLJD: fully agree with you. From the UK but, spent 15 years on and off between London, Spain and Gibraltar. Moved to Dublin 5 years ago.
It is an absolute farce here. Of the 4 countries i have paid tax in Ireland taxes the middle income earners the most and gives absolutely nothing in return.
45% on anything above €35k is a joke. I earn reasonable money but, by no means a high earner and work my arse off for a bonus each year which the taxman immediately cuts in half. I have company healthcare….that i am taxed on. Literally a gatve here.
I could forgive paying in so much if i got something in terms of healthcare or saw investment in infrastructure but, literally where does the money go?
I couldn’t even avail of a dental polish last year despite 5 years of paying ridiculous tax.
@Jack Inman: I have been saying that for years but always get shot down by the bots. The people that put you down for suggesting it have never left the country. They have never lived and worked in other counties.
It is brutal here to be honest. The cost of living is ridiculously high. First world tax rates for third world services.
@David Corrigan: what part do you live in that you get services? From people I know in the public sector, seems to be millions of them that claim to be civil servants, always claim to be busy. I think that’s forwarding and re forwarding a spreadsheet on Windows 98 all day. I’m sick of paying so much tax and then paying to do whatever I need to on top of that. The needless waste in this country is a joke and then we’ve charities trying to provide basic services and you feel obliged to support them. If that’s the case tax me less and have transparent charities and I’ll give the difference to them.
@ThatLJD: To be honest with you, I keep as low a profile as possible. I keep cost of living to a bare minimum. I don’t avail of any of the services here like health or whatever.
The recent crisis really did show high backwards we are as a country. The majority of people here live week to week. They have no savings or pensions put away for rainy days or retirement. I know people working in manufacturing jobs taking home less than 330 per week after tax. 40 hours per week for that mickey mouse money!
The thing is we have the people and ability to do great things in this country. We have a good college system and reputation as innovative, hard working people.
The system needs to be changed here to encourage innovation and creativity. Get rid of the red tape and improve the safety nets for companies that try and fail. Let them get up and go again.
It turns my stomach listening to the people that defend how this kip is run. To me they are brain washed wasters who have never experienced anything outside of the “zone”. They vote FF and FG because their folks did etc. Pure and utter clowns of the highest order.
We as a people can do a lot better. Build the infrastructures here to allow the people improve things and build a country we can be proud of.
Always put down the clown that tries to stop it. They are the ones that stop progression.
@David Corrigan:Think the intelligent and innovative thinkers are doomed to see there’s no point wasting energy trying to change a broken system. It’s so full of the most bang average population of workers. I’m talking the entire civil service. The average IQ level would be well below your private sector workplace. I’m not saying there aren’t good people there, it’s just the two or three that are are probably so swamped in mediocrity they’ve given up. The rate at which businesses and people have folded during this whole thing like after a week people almost destitute without state support, what the hell! Who said the economy was healthy! That’s like me smoking and drinking everyday and then giving up and the next day having a heart attack and being surprised as I’d just given up!
@ThatLJD: That’s it in a nutshell. It’s sickening to look at to be honest.
@David Corrigan: A lot of people vote Ff/FG not because they have faith in them, but because they think the alternative would be even worse.
@ThatLJD: please do
Maybe in the future SME’s should be allowed to just pay a tiny fraction of what the rightfully owe in tax, like Google, Facebook, Big Pharma et. al. have been doing for years.
Strictly from the hospitality point of view, it will be absolutely impossible to make any profit while distancing is in place. Most businesses in this sector make their profit from the last 10 to 20 per cent of turnover. It is imperative that this sector receives continued wage supports in order to function. Also, capping the “Grant” at 10K makes no sense whatsoever. A “one size fits all” approach is totally inequitable. Any grant given must be turnover (pre covid) and wage roll based.
@Sven Gilmore: the more uncertainty for business the more likely a business will decide to shut for good.
Social distancing is impossible for employees in the catering industry yet we will pretend we can do it.
You cannot even serve food with the rules..
The policies will be a disaster for Ireland
@Vladimir Macro: Yes it is totally impractical and non-sensical. Unfortunately a lot of operators will find out the hard way that this model is unsustainable. Huge inputs by government would be required to make it profitable. Reopening businesses in the hospitality sector is pointless until all restrictions are lifted. Simply pointless.
Small buisness will be lucky if they see a cent before Christmas. The bureaucracy within the Irish system is a Joke at the best of times. A grant system will be plagued with bloat of managment and lack of staffing to deal with the actual with the core issues.
I wish people would stop going on About pubs and nightclubs.aside from job losses they are not important and not essential.
@Stan Kowalskis: Stan you are quite wrong my friend – the number of visitors to Ireland fuels thousands of ancillary jobs and business in everything from local transport , hospitality etc etv and these visitors aint coming to visit for the weather – the whole social fabric of Ireland and experience of holidays here are fuelled by pubs etc – that and the reason the second most googled question in the last week was ‘when are the pibs open’ should indicate that locals here value their social life – it isn’t about what you call ‘essential’ – thats for the past months not the future – we need to get living our lives back in ireland not obsess about moralising and think about ‘essential only’ services FFS
Seoul has again closed all nightclubs and bars etc following a further outbreak over the weekend,so far 40 have been diagnosed with the virus. Not looking good for here, seeing that Korea seemed to have the virus under control.
@Michael Byrne: Thats scaremongering Michael – South Korean have not shut down ‘again’ – they are aggressively tracking and tracking cases using mobile tech and found a case had visited 3 clubs so of course closes the premises in question – but they are reopened and learning to live with the virus present – it is the social distancing that has the best effect of stoping the spread not full lockdown – you are creating the impression that they reopend from lockdown and then had to reverse – thats JUST NOT TRUE – people are anxious enough and getting fed all sorts of scare and fear mongering crap – the overwhelming evidence is that by far practicing social distance is what stops the spread not the lockdown which we are taking far too long to spread out actually – but if you are going to comment on whats happening in other parts of the world then could you at the very least be ACCURATE instead of half informed facts please.
@Dave Hammond: you get your facts right, they have closed 2100 nightclubs etc, not scaremongering, stating facts.
Hurry up and open the gyms.
They should be under essential service for mental health and wellbeing.
@Eddie Michael: Agree Eddie the Irish approach to reopening is far far too conservative and overly cautious and becoming more bureaucratic and nanny state by the day – this spreading out over 15 weeks should be challenged more as the other countries like germany are taking much more sensible and balanced approach to getting people back to some sort of normal – they are also paying substantial more grants to help all size of business – i think anything helping the mental health and well being should be the first to reopen with sensible protections in place – there is no benefit to delaying until August as the same things need to be donw by then anyway IMO
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