The July Jobs Stimulus program, which promises a €5 billion cash stimulus along with €2 billion in loan guarantees for business is an ambitious attempt to support and kick start the economy. Included within the program are a number of valuable grant and funding supports that businesses should progress to bolster their cashflow as the economy continues to adjust to the new trading normality.
An expansion of the existing Restart Grant launched in May is very welcome as a practical and fast method of getting cash back into businesses. The maximum grant, which is linked to 2019 commercial rates, has been increased to €25,000 and the minimum doubled to €4,000. Existing grants have been simple to apply for and processed quickly, providing a timely cash injection.
Waiver of Commercial Rates
With limited exceptions, all businesses will be granted a waiver of commercial rates for the six months to end-September 2020, at a total cost of €600 million.
Sustaining Enterprise Fund – grant element
The existing Sustaining Enterprise Fund of €180 million comprised repayable advances and equity support. This is now being expanded to include direct grant support for viable businesses. Specific detail of the grant element is awaited.
Covid-19 Credit Guarantee Scheme
The €2 billion COVID-19 Credit Guarantee Scheme will see Government provide an 80% guarantee for a wide range of credit products from €10,000 to €1 million up to a maximum term of 6 years. This Scheme should help a quicker loan approval and drawdown process with banks.
SBCI Future Growth Loan Scheme
Additional funding has been allocated to this Scheme offering longer term loans for investment, now totalling €500million. Specific details are being finalised, but with a term in excess of 6 years and competitive interest rates, we are expecting significant demand for this product with a number of clients already expressing interest in applying.
MicroFinance Ireland and Local Enterprise Office
A package of liquidity and enterprise investment measures worth €55 million will be put in place to support small and micro companies through additional resources for MicroFinance Ireland and the Local Enterprise Offices.
This will include measures to reduce interest rates on lending for micro and small businesses, including grants equivalent to 0% interest on the first year of SBCI and MFI loans.
Preparing for the Economy of the Future
A range of individual supports were announced, many of which will have sector specific focus. Of key note we would highlight:
- Online Retail Scheme: Additional funding is being made available through Enterprise Ireland and the Local Enterprise Offices to the valuable support assist retailers develop and enhance their online trading capabilities
- €25 million investment in the COVID Life Sciences Products Scheme to aid the research, development and production of medicinal products in Ireland that are used in the fight against COVID-19
- to help businesses adapt to the green economy, €10 million will be provided to support businesses engaging in green research, development and innovation, capital investment, and capacity building, through the first phase of a new Green Enterprise Fund
- a €20 million Brexit fund to help SMEs involved in exporting and importing with the UK and further afield to put in place the staff, software and IT systems to be ready for new customs arrangements from 1 January 2021
There are a range of welcome measures announced. The challenge now is to get the funding deployed and working in the economy. Businesses have been reluctant to take on new or additional debt as a response to the crisis, which can be the appropriate response given the uncertainty that is still prevailing. Assessing the supports and availing of those most suitable to supporting each business is the next step – and one to be taken as soon as possible to allow for the inevitable timelines until the funds are in the business and available to spend.
Do discuss how your business can avail of funding supports introduced in the July Stimulus Package, please contact our team on (01) 6440100 / (090) 6480600:
- Chris Ball, Corporate Finance Partner
- Eddie Darby, Corporate Finance Manager