‘Large number’ of SMEs at risk if supports go, industry group warns

Small Firms Association calls on Government to extend Employment Wage Subsidy Scheme, the Covid Restrictions Support Scheme and the commercial rates waiver

Finance Minister Paschal Donohoe has said there would be no cliff-edge end to business supports.

A “large number” of small companies are at risk of going out of business if current Covid business supports are not maintained and new rescue legislation is not introduced by the summer, the Small Firms Association (SFA) has warned.

Ahead of an anticipated update on the easing of restrictions next week, the SFA has called on the Government to publish a clear reopening plan for business – saying small business owners are “exhausted” by “mixed messaging”, which is “adding to their anxiety” after remaining closed for so long.

In particular, the SFA wants the Government to extend the Employment Wage Subsidy Scheme, the Covid Restrictions Support Scheme (CRSS) and the commercial rates waiver.

Passing into law proposed small business rescue legislation – aimed at making application for examinership cheaper and simpler – is also key, according to SFA director Sven Spollen-Behrens.

At risk

He said “a large number” of small businesses could be at risk if these measures are not in place going into the second half of the year.

“Business owners need a timely, practical, and realistic plan for when they can welcome back customers and employees to the office,” Mr Spollen-Behrens said, adding that SMEs need time to prepare staff, order new stock, activate their supply chains and evaluate their cash flow needs.

The wage subsidy scheme is still slated to run to the end of June, but Finance Minister Paschal Donohoe has promised no cliff-edge end to economic supports when that deadline comes.

“We are conscious that continued support will be required to assist sectors of the economy on the path to recovery and we will set out these plans in the coming weeks,” Mr Donohoe said earlier this week.

The Department of Finance has spent €9bn in supports – including the wage subsidy schemes and the CRSS and warehoused tax debt – while the Department of Social Protection has paid out €6.5bn under the PUP scheme.

“The easing of restrictions will be a relief to the business community, but it doesn’t mean this crisis is over for our smallest employers,” said Mr Spollen-Behrens.

'Saddled with debt'

“These businesses are saddled with debt and when they do reopen, they could be facing ongoing restrictions that will hamper their capacity to generate revenue. It is vital that the full range of Covid-19 business supports are kept in place for as long as needed.

“Rising business costs is a growing concern amongst small business owners, particularly rising supply chain, Brexit and employment costs, utilities and the resource costs of navigating red tape. Due to the withdrawal of Ulster Bank and KBC, access to and the cost of finance to grow after this crisis will be more challenging,” he said.

Company insolvencies fell by 30% year-on-year in the first three months of this year. 

But, Deloitte, which compiled the data, said the true level of corporate distress is likely being concealed by the various Government supports and the real picture may not be visible until much later in the year.