The Covid-19 pandemic has created severe challenges for Irish businesses with significant job and financial losses, worldwide market disruption and uncertain times ahead. The Government has responded to the crisis by working with Irish businesses to help them avail of financial and other supports which are designed to help businesses stabilise, adapt to the changing situation and prepare for getting back on the road to recovery.
Businesses must play their part too and focus on what strategic and structural changes need to be made to consolidate and survive.
But before you think about any changes, you need to make sure the business will survive now to see your ideas work later.
4 point plan
This is what we recommend your 4 point plan should be:
- Stay focused! Only cash matters in the short term – anything else is a distraction. Cash is king – now more than ever.
- Prepare a monthly cash flow for the next year incorporating an emergency rolling 3 month forecastto estimate how much cash is needed in the short term. Keep it simple and be prudent with your estimates. This will help you to identify your immediate financial priorities and focus on identifying short term quick “wins” through reducing costs by eliminating unnecessary expenses.
- Once you have a realistic idea of your financial position and cash requirement, look for help whether it is financial support (see below).
- Do a detailed review of your position now and your future prospects so you can determine a strategy to not just survive but build a better business.
The following provides information on the main supports for SME’S excluding ongoing payroll assistance.
LOCAL ENTERPRISE OFFICE (LEO)
Business Continuity Voucher
The LEO Business Continuity Voucher is designed for businesses across every sector that employ up to 50 people. It is worth up to €2,500 in third party consultancy costs and can be used by companies and sole traders to develop both short-term and long-term strategies to respond to Covid-19. This scheme is expiring when the fund has been exhausted or on 15th May 2020 whichever is earlier.
Trading Online Voucher
The LEO Trading Online Voucher is designed to assist small businesses with up to 10 employees. It offers financial assistance of up to €2,500 along with training and advice to help a business to trade more online, boost sales and reach new markets. Businesses that have already received a Trading Online Voucher can now apply for a second voucher, where upgrades are required.
Funding can be used towards adding payment facilities or booking systems to a website or developing new apps for customers. The voucher can also be used towards subscriptions to low cost online retail platform solutions to help companies quickly establish a retailing presence online.
See link here
Covid-19 Business Loan
The Covid-19 Business Loan from Microfinance Ireland (MFI) is designed for businesses currently trading with less than 10 employees and up to €2m annual turnover that are having difficulty accessing Bank finance and are impacted, or may be impacted negatively, by Covid-19 resulting in a reduction of 15% or more in turnover or profit.
Loans to a maximum of €50,000 for typically up to 3 years may be used for working capital and required business changes from Covid-19. There is a 6 months interest free and repayment free moratorium with the loan to then be repaid over the remaining 30 months.
The interest rate is 4.5% if submitted through LEO or 5.5% if you apply to Microfinance Ireland directly.
The LEO can also offer financial supports to help manage market challenges via Business Priming Grants, Business Expansion Grants, Feasibility Study Grants and Technical Assistance for Micro-Exporters Grant.
Covid-19 Business Financial Planning Grant
This grant, worth up to €5,000, is a new support for Enterprise Ireland clients and those manufacturing or providing internationally traded services that employ 10 or more full time employees.
It will enable companies to access external support from approved financial consultants to prepare a financial plan, to secure the company in the short to medium term, including the preparation of documentation required to support applications for external finance from banks and/or other finance providers.
The Covid-19 Online Retail Scheme (budget €2m) is a grant for retail companies with greater than 10 employees to develop a more competitive online offer. Funding support is up to 80% of project costs with a maximum grant of €40,000.
Sustaining Enterprise Fund
The new Sustaining Enterprise Fund of up to €180m is specifically aimed at firms with 10 or more employees impacted by Covid-19 that are vulnerable but viable. It will provide a €25,000 to €50,000 short term funding injection to eligible smaller companies to support business continuity and to strengthen their ability to return to growth. Eligible companies will have been impacted, or may be impacted negatively, by Covid-19 resulting in a reduction of 15% or more in turnover or profit.
Rescue and Restructuring Scheme
This scheme is for vulnerable but viable firms in financial difficulty or experiencing acute liquidity needs that need to restructure or transform their business and offers both rescue aid and temporary restructuring aid. It aims to avoid situations where value-creating and viable SMEs, with the potential to restore their competitiveness, experience difficulties because of an inability to access finance from credit markets.
Lean Business Improvement Voucher
The Lean Business Continuity Voucher is available to eligible companies to access up to €2,500 in training or advisory services support related to the continued operation of their businesses during the current pandemic. It is open to small, medium or large client companies of Enterprise Ireland or Údarás na Gaeltachta.
STRATEGIC BANKING CORPORATION OF IRELAND (SBCI)
Covid-19 Working Capital Scheme
This €250m scheme can help businesses avoid layoffs and offset other costs that keep business afloat and can be used for future working capital or to support necessary business changes from Covid-19.
Loans ranging from €25,000 to €1.5m will be available at reduced rates (max 4%) with up to the first €500,000 unsecured. Applications can be made via the SBCI website until the fund has been exhausted or by March 2021 whichever is earlier.
SME Credit Guarantee Scheme
This repurposed scheme supports loans of between €10,000 and €1m with terms up to seven years provided by the main commercial banks and is backed by a partial Government guarantee of 80%. SMEs will not be required to provide collateral or risk mitigating their credit when receiving support. The lending bank is ultimately responsible for the credit decision.
Revenue will assist businesses who will be experiencing cash flow and trading problems from Covid-19.
The application of interest on late payments is suspended for January/April 2020 VAT and February/June 2020 PAYE/PRSI.
Arrangements will be put in place to allow debt that cannot be paid during the Covid-19 related period, to be warehoused interest-free for a year from recommencement of trading, during which time there will be no debt enforcement action taken in respect of the debt. Moreover, there will be no interest charge accruing in respect of the warehoused debt. Prior to the expiry of the warehousing period, the business will be expected to engage with Revenue to reach an agreement on an exit strategy more suited to the specific business needs and the need for continued viability.
Businesses will qualify for a significantly reduced rate of interest of 3% on outstanding debts on agreement of such arrangements. For continued qualification by businesses for these arrangements, it is essential that businesses remain compliant with all their return filing and tax payment obligations in respect of tax periods that postdate the periods covered by the warehoused debt.
Businesses should continue to send in tax returns on time.
Current tax clearance status will remain in place for all businesses over the coming months.
All debt enforcement activity is suspended until further notice.
Commercial rates are being waived for a three-month period beginning on 27 March for businesses that have been forced to close due to public health requirements.
The purpose of the proposed €250m Restart Fund will be to assist Covid-19 impacted SME’S in reconnecting with the market, their employees and their customers. Details of the scheme are under consideration but it is intended that the fund will operate through a system of rebates/waivers of commercial rates payments from 2019. It is intended that companies will receive a total amount equivalent to no more than their 2019 rates bill and that there will be a cap per business of €10,000.
For business customers the main banks are providing emergency working capital, payment flexibility on loan facilities, the provision of trade finance and foreign currency products, and the prioritisation of loan decisions. They have established new processes for dealing with requests from business customers impacted by Covid-19 in order to respond to their needs as quickly as possible. They are prioritising Covid-19 related inquiries over other business activities. This includes streamlining requests for payment breaks so that these can as far as possible be delivered before the next payment falls due.
Enterprise Ireland’s eiLearn is an online learning resource where you can access over 400 pieces of customised content designed for Irish SMEs. The LEO have training programmes and workshops online, covering areas such as cash management in a crisis, leading your business through Covid-19 and advice for employers impacted by the crisis.