Small and medium sized firms here could need up to €5.7bn in liquidity supports over the coming months as a result of the Covid-19 crisis.
According to a new paper from the Central Bank, the policies to contain the spread of the virus have placed a temporary block between the consumption demands of households and the supply capacity of firms in many sectors.
This shock will mean that a number of companies will need some form of liquidity supports to ensure that they are in a position to reopen when the restrictions are relaxed, it claims.
The bank adopted a range of scenarios and calculated what level of supports may be required over a three month period.
"We estimate that non-agricultural SMEs in Ireland will need between €2.4bn and €5.7bn if their revenues are curtailed for three months," authors Niall McGeever, John McQuinn, Samantha Myers said.
So far the Government has unveiled liquidity measures to help firms worth around €1bn.
The Central Bank notes SMEs are particularly important for job creation in Ireland, accounting for over 1 million employees or 68.4% of total employment in Irish business.
The cost of paying staff makes up a large proportion of the costs of these firms, the paper states, and existing Government supports will reduce that burden, it claims.
However, the ability of companies to reduce non-personnel expenses such as rent, rates, tax, insurance, trade credit, debt repayments and utilities will also be an important determinant of how much liquidity will be needed.
The banking system is one potential source of liquidity for the businesses, they say, and at the end of June last year, Irish SMEs had €2.7bn in undrawn credit available from Irish retail banks.
But small firms' access to this will vary across sectors, the paper claims, and it is likely to prove challenging for SMEs without collateral or an existing relationship with a lender.
Therefore, other possible intervention options may be required from policymakers to support short-term SME liquidity needs, the authors claim.
These include credit guarantee schemes, lending schemes, and direct fiscal supports.
"All intervention options involve delicate trade-offs, which must be carefully assessed," they write.