Doubts surface over €300m SME loan scheme

The Government has said it will provide further details of its €300m Brexit loan scheme for SMEs in the coming weeks amid mounting uncertainty among industry groups.

The scheme, largely aimed at helping with exporting firms’ short-term working capital needs, is expected to become operational in March. However, as the main Brexit-proofing measure for SMEs in the budget, it has already been heavily criticised.

“It is unfortunate that the only role in assisting with this is on the lending side. It is an issue when the only solution is landing on company balance sheets,” said Isme chief Neil McDonnell.

Isme had called for the introduction of a State-backed foreign exchange hedging scheme to help export- orientated SMEs deal with currency fluctuations.

“Irish SMEs are not hedged forward and they will suffer for that,” he said.

The Ibec-affiliated Small Firms’ Association welcomed the scheme as a first concrete element of necessary action to alleviate pressure for export-related SMEs.

However, SFA assistant director Linda Barry said more clarity is needed over loan eligibility, lending rates and the amount the State is providing. She welcomed the involvement of the Strategic Banking Corporation of Ireland but expressed concern over the willingness of SMEs to draw-down funds given their aversion to borrowing from the mainstream banks.

Support is also coming from the European Commission and the European Investment Bank.

Trade expert John Whelan has described the scheme as “window dressing” and “a standard bank loan rebranded as a Brexit support scheme”; claiming calls for grant aid supports and compensation schemes to firms overly exposed to currency fluctuations “fell on deaf ears”.

Meanwhile, analysts Davy said Mr Donohoe’s decision to increase commercial stamp duty from 2% to 6% would have unintended consequences including the setting up of new tax avoidance schemes.

Shares in property investment firm Green Reit went up slightly, while Hibernia Reit and Irish Residential Properties Reit remained virtually unchanged following the tax rise, which came in at 12am yesterday.

Analyst Colin Grant said Davy expected tax avoidance schemes to reappear and that it could “curtail future developments, keeping rents higher for longer”.

“We expect that some element of the 4% stamp duty increase will be passed on to purchasers in the form of asset inflation,” said Mr Grant.

However he said Davy expected the “ongoing favourable dynamics of Irish commercial real estate to outweigh the impact of this stamp duty increase”.

In contrast to mostly negative views from property firms, the managing director of real estate adviser WK Nowlan said the rise to 6% was welcome.

Killian O’Higgins said: “If anything is learned from the past, it is that sectors of the economy doing well should be prepared to contribute more in good times — it justifies support in bad times.”

In a bid to ease concerns that those involved in commercial property transactions would be landed with an extra tax rise, the Government said the Finance Bill will contain “transitional arrangements to cater for situations where binding contracts have been entered into”.


Related Articles

Theresa May plea to EU for Brexit deal 'we can defend to our people'

Taoiseach: We are 'far back from cliff edge' but EU must not 'sleep walk' to Brexit cliff

Merkel hails 'encouraging' signs for Brexit trade talks.

Theresa May says agreement on EU citizens in UK 'within touching distance'

More in this Section

Finance Bill signals new workload for firms on PAYE

Unilever sales under target

Storm clouds over Budget 2018 are yet to blow over

Sterling slips on Moody warning


Breaking Stories

Ryanair settles with Google and website it said had conned passengers

Case brought by Lloyds shareholders 'fundamentally flawed', says British High Court

BP hunts for successor as chairman looks to retire

Goldman Sachs boss hails Frankfurt amid Brexit shift

Lifestyle

Facing fears while terrifying punters at Cork's Nightmare Realm

Weathering the storm of 1961: We watched 30 large trees uprooted

Remembering the dead: Poignant reason behind Cork’s Zombie Walk

More From The Irish Examiner