SMEs are organisations that employ up to 250 people and are the lifeblood of the Irish economy. They account for 99% of active enterprises and 70% of employment.
The people who create and lead SMEs all over Ireland are incredibly diverse - from family owned businesses, rural-owner managers, traditional, high growth and technology start-ups.
The SMEs worst impacted by the shutdown number over 100,000, employ over half a million people, and are significantly ingrained in the local fabric of communities up and down the country.
Ibec's COVID-19 survey of over 550 CEOs showed that over 80% have seen a hit to their profitability in 2020. Two-thirds of those companies have suffered substantial losses.
- Almost 20% of CEOs have had to close their organisation completely.
- Almost half of CEOs expect a return to pre-COVID demand to take six months or more.
With no time to adjust and incredible pressure on cash flow in the economy, for business, this recession is like no other. This has left many SMEs exposed with bills piling up, expensive stock and payment timelines stretched. While the economy re-opens, the future is uncertain and many SMEs are wondering where they will get the cash to survive.
To reboot SMEs it is crucial that the ‘July Stimulus Plan’ delivers the following three outcomes:
- Significantly improve the Restart Grant: Increase the fund to over €1 billion, including a flat rate payment of €15,000 per company to match the German and UK schemes and remove the link to the rSates system which disqualifies so many smaller operators
- Introduce a new and radically improved ‘bounce-back’ credit guarantee scheme for firms with below 50 employees: with 100% guarantees on loans, no portfolio limit and an interest rate holiday of 12 months followed by interest rates well below the eurozone average
- Introduce measures to address fixed costs and debts: Introduce a fund to write down debts under the Revenue tax warehousing scheme where they threaten business viability, extend the commercial rates waiver to six months with a further six-month deferral, and introduce a binding mandatory arbitration model for disputes over commercial leases.
This arbitration model should include some State burden sharing based on the recent Swedish state-aid approved model.