Ireland’s main business group Ibec said that the Government's planned summer recovery package for small firms need not stretch to multi-billions and could be pegged to as little as €2.7bn upfront to save many thousands of jobs.
Its shopping list of emergency supports for SMEs includes direct grants for 70,000 small firms and for the Government to provide 100%-backed loans of zero interest rates for 12 months.
The call comes as Finance Minister Paschal Donohoe prepares to unveil the long-touted recovery and stimulus package.
But Ibec insists that many of the measures it wants are already in place for small firms in the North funded by the British government and have been tried and tested and are hugely successful in keeping small firms alive in Switzerland and Germany too since March.
It wants Minister Donohoe to top up by an extra €1bn an existing €250m pot to allow the Government to provide €15,000 to each of more than 70,000 small firms it estimates will likely qualify for the “restart grant”.
The business group said that the comparison with an existing UK scheme makes for uncomfortable reading, as the average payment there runs at many multiples of the average €3,000 grant that SMEs can avail under the Government’s scheme.
Ibec said there needs to be no upfront cost for the Government for it to unveil a State credit guarantee scheme of cheap or zero-interest loans targeted at small firms.
The potential liability would be a fraction of the States' total liability of €2bn under the loans scheme if the overall package helps the economy to rebound, it said.
It wants bank loans that are fully-guaranteed against default by the State that involve no interest payments for 12 months and that are “below average eurozone rates” thereafter.
Many economists have long said that Ireland stands out as one of the few countries that do not offer companies state-guaranteed loans in its armoury to support the economy during the Covid-19 economic crisis.
Moreover, small firms have long complained they have suffered hidden costs, as Irish banks charge them among the highest costs for their loans in the eurozone, putting them at a competitive disadvantage.
Ibec cites the experience of Britain which scrapped an original plan when SMEs failed to qualify for the loans and moved to 100%-state-backed loans. Its revised scheme has led to 600,000 loans through commercial banks.
The business group also wants Minister Donohoe to fund a further package of measures which it costs at a total of €1.7bn.
The proposals include a fund to allow Revenue “to warehouse” debts of small firms when they could be saved from closure; extending the breaks on commercial rates; and a fund to encourage commercial landlords to cut the rents they charge small firms.
By implementing the proposals, Ibec chief economist Gerard Brady said the Government would be playing catch up with schemes that are already available in many other countries.
Mr Brady said that many small firms face significant costs in starting up again after the health lockdown.
“Unless there is a dramatic intervention significant numbers of businesses will fail in 2020,” he said.