Key questions on the minds of business owners right now include ‘when will all this be over?’ and ‘how do I go about rebuilding my company?’
Whatever about the answer to question one, in regard to the second, “the recovery needs cash not debt”, according to John McGrane of Ireland’s Family Business Network.
The organisation representing Irish family owned businesses throughout the country has called for the immediate creation of a National Recovery Fund to save jobs and rebuild the economy in the months ahead.
Although welcoming the government’s new loan schemes for businesses affected by the COVID-19 crisis announced last week, the Family Business Network (FBN) Ireland cautioned against relying on borrowings alone.
It warned that under current arrangements, firms that survive the immediate crisis risk being killed by deferred debts. Many employers will simply be unable to continue trading with the burden of deferred liabilities including local authority rates.
FBN Ireland has instead called for a National Recovery Fund to be deployed by the NTMA. The Fund would inject cash into deserving businesses in return for a form of future coupon from those who succeed. This would avoid layering additional levels of debt on family owned companies and focus on rebuilding their businesses. New ‘recovery bonds’ and the government’s existing Rainy Day Fund could likely fund the national project.
Speaking on behalf of FBN Ireland, its Executive Director John McGrane said: “Irish businesses learned the hard way that funding their business by debt alone is a route to disaster. What we need now is a National Recovery Fund on behalf of the whole nation.
“We should maintain the national consensus and ability to get things done by implementing a shared national fund that can quickly give viable firms cash – like we’ve done with the Temporary Wage Subsidy Scheme – without the threat of repayment unless some becomes affordable later on.
“Irish family owned businesses are not expecting charity but a package that’s fair to both the State – by avoiding massive welfare payments and loss of income – and to Irish employers. Let’s make sure we don’t saddle viable local family enterprises with levels of debt that are self-defeating.
“Ireland massively depends on the incomes, the rates and the taxes that these locally-owned employers generate. More than ever, Ireland needs what Irish families in business deliver for the community through jobs, local procurement and exports. Unshackling businesses from a burden of debt will help us to secure that recovery.”
Up until recent weeks, Irish indigenous firms employed over 700,000 jobs in every part of the country and generated over 50% of Ireland’s total GDP.
There has been much talk about what type of recovery measures will be put in place once normal activity resumes, with some suggesting a blueprint similar to the Marshal Plan which Europe adopted after World War II will be needed.
With no clarity about the way forward for SME’s from the government or the EU those questions about how they aim to support the sector once we are the other side of this aren’t going away.