We may be coming out of the lockdown but the economic effects of the coronavirus pandemic are not yet fully visible.
What is becoming clear though, is that scores of businesses are facing closure.
Employers group Ibec is the latest to offer a blueprint it says is critical for the future of the SME sector.
Ibec Chief Economist Gerard Brady, said: “The SME sector has been the worst impacted by the enforced lockdown of business and consumers due to the COVID-19 pandemic. Unless there is a dramatic intervention significant numbers of businesses will fail in 2020.
“Our research indicates that for over 7 in 10 companies, the minimum period in which they expect ‘normal’ demand to return is greater than their existing cash reserves. This ‘liquidity gap’ will need to be bridged by external funding in order for many of these companies to survive.
“The July Stimulus provides an opportunity to deliver emergency supports to the SME sector that can provide critical bridging finance while SMEs try to trade their way through and adapt to the new normal. Not every SME will survive but it is imperative that we preserve as much of the SME ecosystem as possible to keep as many people in employment as we can.” said the Ibec economist.
It will be the end of the week before we know if a new government can be formed, any delay to that will throw the political system into chaos and either a new round of government formation talks or an election.
It’s taken months to get to this point, and many business owners are in a state of peril.
“A stable political executive and legislature is crucial to enable implementation of urgent policy measures. These proposed measures across SMEs and the wider business community are unprecedented, but we are living in unprecedented times.”
The policy recommendations in Sustaining SMEs is part of Ibec’s Reboot & Reimagine campaign.
The three urgent policy area recommendations for SMEs in the July Stimulus are:
- Restart Grant: Significantly improve the overall fund to in excess of €1 billion, including a flat payment of €15,000 per company to match schemes in Germany and the UK. In addition, the link to the rates system which disqualifies many smaller operators should be removed.
- Credit guarantee: Introduce a new and improved ‘bounce-back’ credit guarantees on loans with 100% guarantees, no portfolio limit and an interest rate holiday of 12 months to be followed by interest rates below the Eurozone average.
- Business fixed costs and debts: Introduce a fund to write down debts under the Revenue Commissioners tax warehousing scheme when 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 approval model.
All music to the ears of business owners but how realistic a prospect is the introduction of these measures anytime soon?😬😬😬