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July Stimulus Package – What’s in it for SME’s?

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The Government announced the much anticipated stimulus plan yesterday. In some quarters it has been described as a mini-budget. We all agree it was essential to introduce measures to boost the economy and ensure the survival of so many SME’s.

You’ll know that we supported the SME Recovery group headed up by John Moran, the number required for adequate support of the SME Sector is €15bn so this €5bn while well intended is wildly off the mark.

That said – How will you and your company benefit?

We analyse the elements of the package and how it effects SME’S in Ireland.

Main points for Business:
• The Temporary Wage Subsidy Scheme is going to be replaced by an Employment Wage Support Scheme. Employers whose turnover has fallen 30 per cent will receive a flat-rate subsidy of up to €203 per week per employee. The scheme has also expanded, and now workers such as seasonal staff and new start- up firms operating in affected areas will be included – this scheme is a lifeline for SMEs at the moment. However it is still unclear how the 30% turnover drop will be calculated. Some businesses who are now open and have seen a temporary increase in turnover may be excluded unfairly.

• The Government had previously announced a €250 million restart grant, this is being more than doubled to €550 million and the upper limit for payments is being increased to €25,000; payments will also be available to those who already received a cash injection, through a top up mechanism, and some businesses like B&Bs who had been ineligible will be included – again this is a positive steps for small businesses and the upper limit will certainly be welcomed

• The waiver of commercial rates will be extended to September, which will cost the government €60 million – any waiver of rates is positive but it would have been nice to see this extended beyond September – It will take a lot longer than that for some businesses to return to any level of normality

• €55 million is being made available for small and micro companies, including measures to reduce rates and grants equivalent to 0 per cent in some loan products – Small and micro enterprises don’t need debt, they can’t carry debt and in a very uncertain economic upcoming 3-6 months, more debt will only increase stress as they will struggle to repay. They need grants.

• The Future Growth Loan Scheme is being expanded from €200 million to €500 million, with the support of the European Investment Bank, with businesses up to 499 employees eligible for longer-term loans at competitive rates – a positive step for a lot of businesses who are looking for major long-term investment and expansion

• The Covid-19 Credit Guarantee scheme is being expanded to €2 billion, as announced earlier this month – the blockage here is that Banks are in the way, they are not processing loan applications at the speed they need to be. More money through a broken system will not improve anything. It will be interesting to see if this is addressed by the Government

• There is a new apprenticeship incentivisation scheme which will provide a €2,000 payment to support employers to take on new apprenticeships in 2020 – a welcome move as apprentices contribute significantly to some businesses

• There will also be subsidies of €7,500 paid to employers under a JobsPlus scheme, paid over two years to hire someone under the age of 30 who is on the live register or the pandemic unemployment payment – this will only work if the right candidate is available, possibly could have been open ended in terms of the age bracket

• Firms will also be allowed to delay payment of their PAYE and VAT debts in part or in full for a set period, with no interest or penalties – this is a short term solution and not sufficient for businesses who are already struggling with cash-flow. Businesses need to be mindful that it is only a delayed payment and need to accounted for when the payment will be due

• There are funding packages for the seed and venture capital scheme (€10 million), another €10 million for the IDA, and €5.5 million for an online retail scheme, while the online trading voucher scheme will be expanded to €20 million. A €20 million Brexit fund for SMEs exporting and importing with the UK has been approved – all of these measures are positive moves once the Government ensures that they are managed in a way to assist and not hinder the businesses in the schemes

The measure introduced by the Government yesterday in the July Stimulus package are a step in the right direction for SMEs who are struggling each day to restart or sustain their business. The funding is not enough, some of the mechanisms to access the money are not fit for purpose.

But, is it better than nothing, yes.

We hope this stimulus reduces the number of SME’s who are forced to close their doors as a result of this Global pandemic.

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