New SME coalition calls for €15bn in recovery supports

The government must show solidarity with small businesses here by agreeing a comprehensive recovery plan for the SME sector worth €15bn, including compensation for losses.

That's the verdict of a new coalition of groups representing small businesses who have come together to launch a National Small Business Recovery Plan.

SME Recovery says the suite of additional measures announced by the Government on Saturday, aimed at assisting firms to emerge from the Covid-19 crisis, was a welcome first step.

But it says just €3.5bn of the €6.5bn announced is aimed at small and medium sized firms and a broader range of measures must be implemented once a new Government is in place.

"The government is to be commended for its responses to date  both on medical aspects and in delivering crucial short term supports to business during the lockdown," chairman of SME Recovery, John Moran, said today.

"But looking beyond the lockdown as we re-open our economy, the next government when formed must apply to the SME Recovery agenda the same professionalism and thoroughness it demonstrated in leading us through the medical crisis."

It said the wage supports and liquidity measures have served a purpose in keeping businesses alive during the Covid-19 restrictions.

However, it claims they must be supplemented by significant further and better lending to SMEs, along with other measures.

These must include a business compensation fund, business stabilisation supports, an extended mandate for the Strategic Banking Corporation of Ireland including greater scale and more favourable terms, as well as measures to boost demand, it claims.

It is also seeking low cost liquidity schemes worth up to €6bn with a minimum one year payment holiday and zero interest rate to give businesses time to recover.

The coalition also wants an innovative compensation fund to recapitalise traders for unprecedented losses suffered by businesses that were viable before the crisis and a streamlined examinership regime.

There effectively needs to be a socialisation of losses, according to John Moran and a sharing of the pain.

"We are going to have to face up to a reality here that we are going to have to wipe out these losses," he said.

The group also wants new governance structures so that there is improved coordination between Government, SMEs and state agencies, and is calling for legislation to be introduced to underpin the recovery plan.

It says targeted policy initiatives need to be introduced at different phases of the crisis.

The plan also includes a suggestion that a 3% VAT rebate be given when invoices are paid within 90 days.

"People have called for  liquidity to be provided for viable businesses," said John Moran.

"Government has responded with increasingly scaled measures to help businesses cashflows. While commendable, this adaptive approach now needs to be replaced by the next government with an approach that is comprehensive in scale and design. It must accept that equitable distribution of compensation for losses must form part of the plan."

In total, the group says the package of measures could cost up to €15bn, with €6bn of that going into liquidity supports and loan.

Much of the remaining €9bn would be needed for stimulating demand in the economy.

Among the members of the SME Recovery coalition are Retail Excellence Ireland, the Restaurants Association of Ireland and ISME.

They argue that SMEs account for 99% of active businesses, 65%of employees here and two thirds of tax revenues and as such need to be seen as central to the economic recovery, particularly in regional and rural areas.

The group argues that Government must recognise that SMEs are vital, that they require a bailout and need to see a boost to demand following the crisis.

Derek Butler, the CEO of alternative lender Grid Finance and co-ordinator of the plan, also claims that forcing SMEs to take on more debt will only delay inevitable problems for many businesses and a compensation fund to help companies is therefore needed.

"We need to act quickly to provide ready access to cash to pay bills and buy stock to reopen. That will keep money flowing in society and allow them to reopen to reemploy hundreds of thousands of our fellow citizens, family members, neighbours and friends", he said.