New Irish SME Recovery alliance seeks Covid-19 'compensation fund'

New Irish SME Recovery alliance seeks Covid-19 'compensation fund'
File image of business owners surveying mounting bills

A new business alliance for small firms led by John Moran -- who was the secretary general of the Department of Finance during the early of former Finance Minister Michael Noonan -- wants the Government to draw up a two year plan and to tap European funds to pump ultra-cheap loans to help SMEs to survive the Covid-19 storm. 

The SME Recovery group includes Isme chief executive Neil McDonnell, Retail Excellence chief executive David Fitzsimons and Restaurants Association of Ireland chief Adrian Cummins, who have repeatedly warned since March about the future of the 1 million people employed by SMEs in the absence of a co-ordinated plan.

The group also includes Business Post publisher Enda O’Coineen and Derek Foley Butler, the head of Grid Finance.

Mr Moran said it wants the Government to think long term but to start planning immediately for a “compensation fund” for small firms that would be funded by tapping EU funds.

“The focus has been on the emergency assistance. But you can’t run a business on those terms to come out with a viable business,” Mr Moran said.

"The EU was already moving in a similar direction and for Ireland to argue for a compensation fund may be pushing at an open door", he continued. 

“Once you put liquidity into the system it stops the contagion and then you look at the net losses and work out the compensation that everyone is entitled to,” Mr Moran said.

The group believes the Government needs to draw up a road map for SMEs in the same way it has done for the lifting of Covid-19 restrictions. 

The SME Recovery coalition wants funding with rock-bottom interest rates because it says struggling SMEs are not going to take out conventional business loans when they have no money coming in the door.

In recent weeks, Central Bank research estimated small firms will need €5.7bn in liquidity measures to survive the crisis. The Banking & Payments Federation Ireland, the business group for banks, estimates that €8bn or €9bn is required when larger SMEs are included.

Mr McDonnell at Isme said though he welcomed the Government’s new liquidity measures announced last weekend that they didn’t go far enough. 

“The fact is that 80% guaranteed loans are not going to be taken up by banks because they will look at the 20% as too much of a risk,” Mr McDonnell said.

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