More grant assistance instead of debt-based solutions are needed for small and medium-sized businesses.
Business group ISME lodged their pre-budget submission saying small and medium businesses in the country on average €76,000 of outstanding business debt that many will struggle to settle because of lost trade and restricted trading in 2020 and 2021.
While they welcomed the extra liquidity measures provided in the July Stimulus, ISME are concerned that they will be insufficient to protect many SMEs and their employees.
"Most of the Covid-19 supports offered so far have been income supports for workers or debt-based solutions," ISME said. "The former cannot be used to settle business debts, and the latter is unpopular with both borrowers and lenders. More grant assistance will be needed. Grants must be decoupled from commercial rates."
The restrictions on redundancy brought in under the Covid-19 emergency legislation will soon end and it is expected to result in a significant rise in redundancies. ISME said the resulting redundancy payments will be the difference between solvency and insolvency for some employers and called for the Statutory Redundancy Rebate to be reintroduced.
"The VAT system needs to be used far more aggressively to stimulate demand," they said. "The temporary top rate reduction to 21% should be made permanent. SMEs need at least a temporary reduction in the 13.5% rate to stimulate domestic services. And finally, in order to mitigate the costs of COVID-19 prevention, essential cleaning materials and PPE should be zero-rated for at least one year."