Broad support for the government’s 6.5 billion euro package for businesses
Business groups have broadly supported the government’s package of measures worth up to € 6.5 billion to help businesses affected by Covid-19, including a trade tariff holiday.
However, there is uncertainty as to the implementation of important elements, as they require the introduction of legislation. This requires the formation of a new government, which may not happen until June, according to Taoiseach Leo Varadkar.
Announced Saturday by Finance Minister Paschal Donohoe, the measures include up to € 2 billion in state-guaranteed loans for SMEs. The loans will range from 10,000 to 1 million euros and will be 80% government guaranteed and offered at below market rates.
The move is designed to provide emergency liquidity to cash-strapped businesses and comes amid criticism of existing programs, which are seen as too expensive to access and not competitive enough.
As part of the government’s expanded bailout for businesses, the tax administration will also “store” VAT and payroll tax debts accumulated by businesses during the foreclosure at zero interest rates and for a period of 12 months. month.
A € 2 billion pandemic stabilization and stimulus fund has also been established, managed by the Irish Strategic Investment Fund, which will make capital available to medium and large companies on commercial terms.
There is also a new restart fund, worth 250 million euros, to directly help micro and small businesses through grants.
And there will be a trade tariff waiver for affected companies for a three-month period, until June 27. This measure amounts to 250 million euros.
Mr Donohoe said the measures are designed to “minimize the damage” from the pandemic. “Our collective public health has been targeted; our businesses and our economy bear an unimaginable burden; and our society is grappling with this new reality, ”he said.
“But, by working together, we minimize the damage. In addition to the measures previously put in place by the government, this series of measures presented today are designed to build confidence, further assist companies in terms of running their businesses and allow them to start looking to the future and to begin to chart a course for the weeks and months to come.
Wage subsidy scheme
Regarding the government’s temporary wage subsidy scheme and the Covid-19 Special Unemployment Benefit, put in place at the end of March for a period of 12 weeks, Mr Donohoe said he was aware of the end point of these schemes and the need for clarity before these end dates.
More than a million workers are benefiting from these programs, but they are expected to expire before the economy reopens as part of the government’s five-phase plan to exit the lockdown, announced last Friday.
Mr Donohoe also said the government has not taken a decision on whether to reduce the VAT rate for tourism and the hotel industry.
The Ibec employers’ group welcomed what it described as “another important package to support business liquidity and cash flow”.
“The scale of the business collapse over the past few weeks has been dramatic and unprecedented and the low interest loan guarantee is important; other liquidity and investment measures; subsidies; and aid for tax deferral and exemption; are an important additional step in resolving the cash flow crisis that so many businesses are facing, ”said Ibec CEO Danny McCoy.
Brian Hayes, managing director of the Banking & Payments Federation Ireland, said the credit guarantee program is an “important step” in improving the liquidity problems facing SMEs, and said banks are would endeavor to ensure its efficient operation.
“We need certainty”
Allan Shine, chief executive of the County Kildare chamber, called for the immediate establishment of a task force on SMEs. “We don’t need to access loans, we don’t need endless grants that don’t address the issues we face. We need certainty, we need accessible, state-supported and meaningful subsidies.
“We are facing the biggest and deepest recession of our lives, we need clear, precise and decisive action. We need a working government now, hopefully not in June. ”
Sven Spollen-Behrens, Director of the Small Firms Association, welcomed the price development. “The commitment of local authorities to fill the tariff shortfall, so that local authorities can continue to provide comprehensive services to the public is welcomed, as it will ensure that our city centers remain attractive to consumers. “
The measures come amid criticism of existing government programs run by the Strategic Banking Corporation of Ireland (SBCI), which are seen as too difficult to access.
The government’s Covid-19 working capital of € 200m for small businesses has had little use to date with € 17m in loans made to 100 borrowers, figures provided to The Irish Times show.