Coronavirus: Financial support to help Irish businesses

With the coronavirus (COVID-19) outbreak affecting businesses across the country, the Irish government has announced a series of financial measures to provide support.

The first one was unveiled on 9 March 2020, a €3bn rescue package – that money was originally earmarked to tackle Brexit.

However, as the impact of the outbreak takes its toll on the economy, the government announced a number of enhanced support measures that will provide businesses with the financial help they need, as well as help those who have lost their jobs either temporarily or permanently.

In this article, we outline the main measures that are in place, in terms of supports earmarked to help businesses – from the government and the banks – while details on unemployment and sick leave are covered too.

Financial support for businesses

There are supports in place for businesses. To avail of these supports, in general a business must prove that its turnover has dropped by 25% and that it’s having liquidity difficulties.

A €200m Strategic Banking Corporation of Ireland (SBCI) working capital fund has been set up to support businesses that have been severely impacted by coronavirus. Loans of up to €1.5m will be made available at reduced rates, with the first €500,000 unsecured.

A further €200m of enterprise supports will be available through Enterprise Ireland to rescue and restructure viable but vulnerable businesses.

In addition, sole traders and companies with up to nine employees in need of microfinancing will see the maximum available amount for immediate loans increase from €25,000 to €50,000.

The Credit Guarantee Scheme (part of the SBCI), which helps viable small businesses secure credit when their bank has refused, is also being promoted.

And to assist with the immediate cost of dealing with coronavirus, Local Enterprise Offices in every county will be providing vouchers from €2,500 up to €10,000 – with 50:50 match funding – to support business continuity, preparedness, innovation and productivity.

Revenue has put several measures in place. The application of interest on late payments of VAT for the January-February return and late payments of employers’ PAYE liabilities for February-March is suspended. Revenue has also said no debt enforcement activity would take place until further notice.

And to relieve regulatory burden so companies can focus on more pressing financial issues, the Companies Registration Office has announced that all annual returns due for filing up to 30 June 2020 will be treated as if they have been filed on time, if all parts of the return are completed by that date. Also, if needed, the deadline may be pushed back further.

Meanwhile, local authorities will defer commercial rates for those who can’t pay them. The deal will relate primarily to the retail, hospitality, leisure and childcare sectors, and will last until the end of May 2020.

Financial measures from the banks

After consultation with the Irish government, the main banks have announced financial measures too. These include:

• A payment break for loans/mortgages, etc, of up to three months for businesses
• Flexibility for bank customers with buy-to-let properties that have tenants impacted by coronavirus. These landlords can seek a mortgage payment break of up to three months, which they can pass on to their tenants
• A simplified application process to make it easy for businesses to get support from their bank
• A solution to ensure that coronavirus applications for a payment break will not affect credit ratings
• Deferral of court proceedings for three months.

Unemployment payments for employees and the self-employed

A temporary wage subsidy scheme has been put in place where the government will pay 70% of an employee’s wages, up to a maximum of €410 tax-free per week (equivalent to an annual salary of €38,000). Where possible, it is expected that the employer will pay the remaining 30%.

The government will pay the employer, who will then pay the employee. The scheme will be administered by Revenue and is intended to run for a 12-week period. To avail of the payment, a company must prove that turnover has declined by more than 25%.

An unemployment payment of €350 is available for employees and the self-employed who have lost their jobs due to a downturn in economic activity caused by coronavirus.

This is significantly higher than the normal unemployment payment of €203 per week and will be available for the duration of the outbreak. The payment has a simple one–page application form and aims to get the payment to unemployed people quickly.

If working hours are reduced to three days or less per week, there is a Short Term Work Support payment.

Sick pay for those with coronavirus or in medically required isolation

The current six-day waiting period for Illness Benefit will not apply to anyone who has coronavirus or is in medically required self-isolation.

The Illness Benefit payment has also increased from €203 per week to €350 per week. It will be paid for a maximum of 12 weeks where a person is self-isolating but will be paid for the duration of a person’s absence from work if they have been diagnosed with coronavirus.

Also, no minimum number of pay related social insurance (PRSI) contributions will be needed to avail of the payment. However, a medical certificate is required.

Conclusion on financial support for businesses

If your business is struggling with cash flow at the moment, it pays to identify which financial support measures you’re eligible for and take steps to get the relevant funding in place.

From loans (remember, you’ll have to pay them back in the future) and mortgage payment breaks, to vouchers and VAT changes, there is support out there that can help your business to keep moving.

It’s also worth keeping abreast of any further announcements from the Irish government, who may be adding more details to recently unveiled measures or even revealing more support for businesses.