Further Covid-19 business supports include new loans at reduced interest costs

Further Covid-19 business supports include new loans at reduced interest costs
Business Minister Heather Humphreys said the schemes were an interim package designed to build on the supports the Government had already announced.

A further package of Government supports to help firms survive the Covid-19 crisis include an expansion of existing loan funds at reduced interest rates, and more vouchers to help small firms build an online sales presence and tap business advice.

However, the schemes fall well short of the zero-interest loans guaranteed by the State that some business groups have called for. 

Business Minister Heather Humphreys said the schemes were an interim package designed to build on the supports the Government had already announced and to address the challenges businesses face with cash flow. More measures will be announced in due course, she told reporters.

“When the time comes, we will come forward with another suite of packages but it is about providing the right suite at the right time,” Ms Humphreys said.

She highlighted an additional €450m in funds made available through the Government’s Strategic Banking Corporation of Ireland, saying the cost of working capital loans were competitive. 

An expanded scheme will be available through Microfinance Ireland for lending to firms with fewer than 10 employees, with the rate cut to 4.5% from 7.8% and repayment holidays.

And she said an €180m facility through Enterprise Ireland was designed to help manufacturing companies and exporting firms to transform some of their processes, citing food companies which now have to sell their products with packaging amid the pandemic.

The measures also include assistance for companies to build or improve their online presence, including an expansion of the existing €2,500 voucher scheme for small firms. 

“It is about sustaining businesses. It is about meeting the demand that is out there. We are hearing for businesses all the time that what they want is liquidity,” Ms Humphreys said.

However, Neil McDonnell, chief executive at business group Isme, said the measures were “not remotely close to being aggressive enough” to meet the challenges as the liquidity of small businesses dried up.      

He said firms were being offered the opportunity to apply for more loans when what they needed was direct cash supports.

Head of policy at business group Ibec, Fergal O’Brien said the measures were an “important step in addressing the credit crisis” and welcomed the prospect of new measures in the coming weeks. 

Mr O’Brien said earlier this week that zero-interest rate loans would be “a game changer”.

The UK has announced a series of packages in recent weeks to help the liquidity of firms hit by the economic fallout of the Covid-19 crisis.

They include measures to automatically defer Vat with firms being given up to a year to defer the Vat payments, as well as other grant-based measures which have been applied in different ways in the North and in Britain.

Rob Heron, tax partner at accountants EY, said the centre piece of the UK measures, the Job Retention Scheme, had had “a very significant uptake” by businesses in Northern Ireland. Under the scheme the UK government pays 80% of a salary up to £2,500 a month for laid-off staff.

Other loan schemes include loans by which the UK government backs lenders for 80% of the amount of the loan  banks provide to companies, to encourage the banks to lend.

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