LAST UPDATE | 2 May 2020
THE GOVERNMENT HAS agreed a series of measures at a special Cabinet meeting today to support small, medium and large businesses recover after the impact of Covid-19.
After the announcement of the phased reopening of the Irish economy, the government said today it “recognises that businesses require significant additional supports”.
Businesses who were forced to cease trading and others affected adversely from Covid-19 had been calling on the government to provide supports to help them deal with the unprecedented crisis.
The measures to support business announced today include:
Speaking today, Minister for Finance Paschal Donohoe said that he appreciates “the massive economic and social challenges” for those out of work and said these measures today would help to rebuild “our jobs, our incomes and our economic health”.
He added: “We believe these are significant measures that will make a difference to the retention of jobs, and the creation of new jobs.”
On the specific call from pubs, restaurants and tourism sectors to reduce the VAT rate on the hospitality industry, Minister Donohoe said a decision had not been taken on that measure yet as – according to the roadmap - it’ll be some time before they reopen.
The measures will cost around €6.5 billion in all.
The government has also committed to local authorities to make up the shortfall on rates, so that these local authorities can still provide services to the public.
Minister for Business Heather Humphreys said: “We now have a comprehensive suite of supports for firms of all sizes, which includes grants, low-cost loans, write-off of commercial rates and deferred tax liabilities, all of which will help to improve cashflow amongst our SMEs.”
Humphreys said advice from Health and Safety Authority is available to those businesses looking to ensure they can enforce health guidelines when they go back to work.
SME credit supports
The credit guarantee scheme for SMEs will cost €2 billion.
Under this scheme, it’ll provide an 80% guarantee on leding to SMEs until the end of this year, for terms between three months to six years.
SMEs will be able to go directly to the banks in the Scheme, and the guarantee can be used for a wide range of lending products between €10,000 and €1 million.
The loans will have interest rates below current market rates, and the government said this is a “major component” of its strategy to support SMEs.
It will require legislation, and the drafting of this has already been approved. However, for legislation to pass, a new government must be formed as the Seanad cannot sit until the new Taoiseach nominates new members to the upper house.
Minister Donohoe acknowledged this was the case, and said a number of decisions had been made and would be made that would have to be ratified by the Dáil and the Seanad.
Reaction
Business group IBEC said it welcomed the measures announced by government today.
Its CEO Danny McCoy said: “The scale of business collapse in recent weeks has been spectacular and unprecedented and the significant low interest loan guarantee; other liquidity and investment measures; grants; and tax deferral and waiver supports; are an important further step in addressing the cashflow crisis which so many businesses are dealing with.
These measures will support businesses through the worst of the economic collapse and help prepare many for reopening. They are an important component of an economic recovery plan and we will continue to work with Government on further initiatives.
Dublin Chamber and the Small Firms Association were among others who welcomed the measures.
However, the Family Business Network however said the measures are a “missed opportunity to maximise jobs and accelerate re-employment”.
Its executive director John McGrane said: “Neither more loans nor unworkable state equity investment are what businesses need to reopen and re-hire. What will get the recovery moving fastest is the extension of the Covid-19 Temporary Wage Supplement Scheme until a reasonable period after the State’s current restrictions on businesses are ended.”
Fianna Fáil’s Business spokesperson said while the measures unveiled today will provide some relief for businesses, they do not tackle the very urgent need to address the high interest rate being charged on government loans, business interruption insurance and rent payments.
“I have been listening to and working with business owners since these restrictions were implemented and three of the main issues that came up time and again was access to low interest loans, insurance and rent. And unfortunately, today’s government announcement does little to address any of these.
“Today’s measures do not address the high interest rate that the government is charging on its microfinance and loan guarantee schemes. These offer rates of around 4%; despite the fact that government can borrow at rates of less than 0.25%. Small and medium businesses are paying the price at a time when they cannot afford to,” he said.
When put to the Minster Humphreys that some government loans in the UK have interest rates as low as 2.5% she said the full suite of measures on offer must be viewed together before comparisons can be made. She said they would continue to monitor the supports put forward by other countries.
With reporting from Christina Finn
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