Government announce further COVID-19 business supports 

Following the publication of the government’s Roadmap for Reopening Society and Business, which sets out a five-stage plan to ease the COVID-19 restrictions and reopen Ireland’s economy and society, Minister for Finance, Public Expenditure and Reform Paschal Donohoe outlined a suite of new support measures to help businesses in the "gradual recovery phase".

These additional measures build on what has already been done to help businesses and are to aid the economy as the COVID-19 restrictions start to be lifted. 

Pandemic Stabilisation and Recovery Fund – available for medium and large enterprises.

The €2bn Pandemic Stabilisation and Recovery Fund is a new fund within the overall portfolio of the Ireland Strategic Investment Fund (ISIF).

It will invest up to €2bn of ISIF’s readily available capital in medium and large enterprises (more than €50m in annual revenue or more than 250 employees) to assist them meet the challenges faced with COVID-19.

This new fund will mirror the approach of ISIF’s existing strategy:

• the fund will act as an accelerator, investing on a commercial basis in businesses that can meet the investment requirements and can use ISIF investment to return to long-term viability
• investments can be across the range of instruments from senior debt, hybrid instruments to equity, and can be tailored to take account of the particular circumstances of each investee
• in making investments, ISIF will seek to maximise the quantum of additional capital that the investee business can access from its existing shareholders and banks, from potential new co-investors and from European sources (such as the European Investment Bank), thereby minimising the amount of ISIF capital that may be needed

COVID-19 Credit Guarantee Scheme – available for SMEs 

The €2bn COVID-19 Credit Guarantee Scheme is a further development of the existing Credit Guarantee Scheme, which is already available from AIB, BOI and Ulster Bank, aimed at supporting lending to SMEs.

It will provide an 80% guarantee on lending to SMEs until the end of this year, for terms between 3 months and 6 years, at interest rates below current market rates.

SMEs will be able to go directly to the banks in the scheme, and the guarantee can be used for a wide range of lending products between €10k and €1m that have a maximum term of six years or less. It will be available to all SME sectors, including primary producers.

It will be possible for other lenders – other than AIB, BOI and Ulster Bank – to get access to the scheme. Lenders will be subject to a portfolio cap of 50%. This reduces the contingent exposure to the Exchequer, meaning that the size of the scheme can be larger.

Implementing this scheme will require legislation, the drafting of which has been approved by government.

Restart fund for micro and small businesses

A Restart Fund of €250m for micro and small enterprises will be established to assist businesses impacted by COVID-19 in reconnecting with the market, their employees and their customers.

Details of the scheme will be worked on by the Department of Public Expenditure and Reform in consultation with the Departments of Business, Enterprise and Innovation and Housing, Planning and Local Government and finalised in the coming weeks but it is intended that the fund will operate through a system of rebates/waivers of commercial rates payments from 2019.

It is intended that companies will receive a total amount equivalent to no more than their 2019 rates bill and that there will be a cap per business of €10k.

Three month commercial rates payment break for impacted businesses
Commercial rates are being waived for a three-month period beginning on 27 March for all businesses that have been forced to close due to public health requirements. 

This follows the announcement in March to defer rate payments for a three-month period for the hospitality, retail, leisure and childcare sectors. 

It is estimated that this waiver will reduce Local Authority income by €260m and the Exchequer will meet these costs

Revenue warehousing of tax forbearance

Arrangements will be put in place to allow accumulated tax liabilities, that cannot be paid during the COVID-related period, to be warehoused interest-free for a year from recommencement of trading, during which time there will be no debt enforcement action taken by Revenue in respect of these liabilities. 

Prior to the expiry of the warehousing period, the business will be expected to engage with Revenue to reach an agreement on an exit strategy more suited to the specific business needs and the need for continued viability. Businesses will qualify for a significantly reduced rate of interest of 3% on outstanding debts on agreement of such arrangements, to be set out in legislation.

Businesses should continue to remain compliant with all their return filing and tax payment obligations.

The operational details are being finalised and the necessary legislative amendments will be brought forward in Finance Bill 2020.

Existing measures

Irish state bodies have introduced a wide range of measures to assist Irish businesses facing financial difficulties as a result of a downturn in business due to COVID-19.

For information on existing measures prior to this 2 May announcement, you can find the detail on our post, Overview of COVID-19 business supports for SMEs, which was last updated on April 14.

If you are looking to engage with your existing funder or a new lender about raising additional funding for your business, contact a member of our corporate finance team to find out how we can help. We have a well-established track record of helping SMEs secure funding lines and have developed strong and long-lasting relationships with all major lending institutions. We can guide you through the process to help ensure a positive outcome.