New group calls for €15bn SME plan
A new group representing SMEs has called on the next government to agree a €15 billion recovery plan for the sector.
Launched on Tuesday by the SME Recovery group, their National Small Business Recovery Plan is based on public consultation and supported by three leading business representative groups. Among the members of the SME Recovery coalition are Retail Excellence Ireland, the Restaurants Association of Ireland and ISME.
Wage supports and liquidity must be supplemented by a significant additional and improved lending to SME and other measures, the new group says.
The group welcomed the recent measures introduced by the Government as essential to tiding business over the next three months, but has called for dialogue with the next government to shape a fully comprehensive plan to ensure the recovery of this vital sector.
“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. But looking beyond the lockdown as we re-open our economy, the next government must apply to the SME recovery agenda the same professionalism and thoroughness it demonstrated in leading us through the medical crisis,” SME Recovery Chairman John Moran said.
John Moran is a former secretary general of the Department of Finance.
The SME Recovery group is calling for additional measures to reverse the surge in unemployment, capitalise small businesses to support a post-Covid-19 economic recovery and tax revenues to pay for general services.
Mr Moran said Government action must recognise three core principles in handling this crisis. Firstly that “SMEs are vital to our social fabric”. Secondly that SMEs need a bailout with a compensation fund and enhanced liquidity supports and thirdly, that SMEs need a post-crisis boost to demand.
Measures
Among the measures called for in the National Small Business Recovery plan are:
- New governance structures to ensure a coordinated consultative response by government, agencies and SME bodies
- An expanded mandate for the Strategic Banking Corporation of Ireland (SBCI) with greater scale and more favourable and diverse lending terms
- A new national compensation fund to compensate business for losses incurred from the crisis by closures imposed by public health measures
- Additional measures to stabilise the small business sector and boost consumer demand over the critical two years of recovery.
Liquidity
“People have called for liquidity to be provided for viable businesses. The 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,” according to Mr Moran.
The group maintains that while adequate for the lockdown period, measures announced to date – amounting to a total of €3.5 billion – will prove inadequate to tackle the challenges of economic downturn once the lockdown ends.
SME Recovery also calls for significant improvement in the design and delivery of supports. “While well intended some of the measures are incorrectly channelled and too expensive,” Derek F. Butler CEO of Grid Finance and group coordinator added. “Without a small business sector, we don’t have an economy after our public health crisis has passed,” he said.
He added that by forcing SMEs to take on more debt during the crisis, the current approach risks “kicking the can down the road” by forcing SMEs into debt for a situation not of their own making. The group believes that businesses that were viable before the crisis have acted in the national interest and should not have to incur debt as a result.
A Small Business Resilience Compensation fund – administered by Revenue and the NTMA – is recommended to both ensure equity in the distribution of compensation and to protect against future systemic business shocks.
“We are talking about saving the dreams and futures of our neighbours and friends who own or work in our local businesses. They shut their businesses down to help safe our lives. Now we need to help them get back on their feet,” Mr Moran said. “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 re-open to re-employ hundreds of thousands of our fellow citizens, family members, neighbours and friends,” added Mr Butler.