Tuesday, June 30, 2020

By Juno McEnroe

A second wave of Covid-19 could trigger more business losses and there is a need for immediate cash injections to protect SMEs, TDs have been told.

The new coalition’s July jobs stimulus must include detailed plans to fund SMEs and not saddle them with debt, the Covid-19 committee has been warned.

Chairman of the SME recovery fund John Moran outlined proposals for a €15bn bailout to help the sector, €6bn of this which needs to be paid immediately.

This money needs to be given out as grant aid and not loans or long term debt, a situation which arose in the last recession, Mr Moran explained.

“I don’t think the state is getting ahead of the problem.” 

“Our firms are looking at pages and pages of application forms,” warned Mr Moran about existing grant schemes which are only delivering small cash injections for SMEs.

“Time is running out…these businesses bring oxygen into our local communities,” he told TDs this morning.

The existing guarantee scheme did not work, he said, and there was a need for new mechanisms, particularly in the July stimulus plan next month.

This multi-billion euro package is still being assessed by government, but is likely to try and reduce VAT for businesses and also extend the wage subsidy scheme.

But Mr Moran said firms could not wait.

Jean McCabe, managing director of Willow Boutique, said government measures so far were being “drop fed out”.

The SME sector was “the backbone to the Irish economy”, she said.

Mr Moran warned that most businesses ran on only two months cash reserve but had now been doing so for over three and half months in the pandemic.

“Built-in protections” were needed if there was a second wave of the virus, he told TDs, and the country “had to do everything” to prevent another mass spread of the virus. Otherwise there would be further serious SME losses, he said.

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