Over 5% of Irish SMEs could go bust in a month due to Covid-19 and Brexit strains

Isme chief executive Neil McDonnell says rising levels of optimism among small business owners in May and July has reversed in September. File image

Just over 5% of small and medium-sized companies feel they may go out of business within the next month.

Pessimism levels are on the rise amongst Irish SMEs as Covid-19 and Brexit strains bite further, a survey from industry representative group Isme shows.

It also suggests that the suite of stimulus measures hurled at businesses during the Covid recession to date haven’t worked for a number of reasons – many firms witnessing high refusal rates in response to financial support applications and others feeling what’s on offer doesn’t benefit smaller businesses.

While nearly 70% of SMEs have availed of either the temporary wage subsidy scheme (TWSS) or its successor the employment wage subsidy scheme (EWSS), take-up levels for other supports have been minimal. 

Only 4% have availed of a restart grant to date, just 2% have taken on a MicroFinance Ireland loan, 4% have taken advantage of the Strategic Banking Corporation of Ireland’s working capital scheme, and just 0.4% have availed of the Credit Guarantee Scheme.

When asked by Isme how long they can continue as a viable going concern, just 56% of SMEs said for more than nine months. 

Furthermore, 18% said just 3-6 months and 17% said 6-9 months.

Just over 5% currently think they will not be able to survive for longer than one more month, as things currently stand. 

The bulk of that figure is made up of SMEs who said they will definitely cease trading within the next month.

The only bright spot is that the 5% figure is down from around 7% back in April. However, it is up from 3% in early August.

“It is notable that after rising levels of optimism among small business owners in our May and July surveys, this has reversed in the September survey,” said Isme CEO Neil McDonnell.

Asked what impact the Covid crisis has had on staffing, nearly 45% of SMEs said some staff have been laid off and some have availed of the wage subsidy schemes. Just under 9% said all staff have had to be let go, while 47% said there had been no effect whatsoever.

Meanwhile, regarding Brexit, Ibec chief executive Danny McCoy told a conference that he expects the UK and the EU to agree a "skeleton" trade deal.

Cork Chamber has urged local businesses to fully prepare for Brexit as a matter of priority; saying both a deal and a no-deal outcome will usher in new obligations and costs for custom procedures, regulation and transit – with the movement of goods and supply chain operations set to be heavily impacted no matter what the outcome of trade talks between the UK and the EU.

Welcoming the Government's new Brexit Readiness Action Plan, Chamber CEO Conor Healy said: “While the economic impact of Covid-19 continues to be immediately pressing for business, we must prepare in parallel for the UK’s departure from the EU." 

"Taken together, these adverse events will cause significant economic impact. We urge businesses to review the Action Plan, avail of appropriate Government supports and take the time now to be Brexit ready.” he said.