4Business lobby group Ibec has called on the Government to introduce support measures for businesses such as a €2 billion zero-interest working capital fund and a crisis cash payment for SMEs to support vulnerable businesses during the pandemic.

Ibec said its measures would increase the total Government crisis response to the economy to about 10 per cent of gross domestic product, bringing the Republic into line with other countries.

The lobby group has proposed liquidity supports such as a 12-month zero-interest rate loan, and a review of bank lending codes and regulatory requirements.

It also called on the Government to extend the SME credit guarantee scheme, introduce a tax deferral for at least three months, sanction a six-month local rates holiday, implement flexibility on tax reporting deadlines and introduce a crisis cash payment for SMEs to a maximum of €15,000.

“Covid-19 is having a significant impact on liquidity in the economy. For many businesses payment timelines are stretched, credit facilities provided by large firms are coming under strain, and the need for cash flow has greatly increased,” said Fergal O’Brien, Ibec’s director of policy and public affairs.

“Left without intervention this will result in a significant spike in liquidations over the coming months and have the knock-on effect of a far slower return to normal operations, investment and expansion for firms who stay open through the crisis.”

State aid

Mr O’Brien added that the European Commission’s announcement on a new temporary framework for state aid to combat the worst economic effects of the pandemic provided an opportunity for Government to be “much more aggressive in supporting enterprises”.

“The State can now provide the benefit of low-cost money directly into Irish SMEs and larger businesses in ways that are not possible in normal times. Solutions to rents and local rates challenges facing businesses must also be addressed.”

The measures outlined in Ibec’s report would cost the exchequer €5.9 billion or 1.6 per cent of GDP.

“Although these are significant sums, there are no cheap alternatives,” said Mr O’Brien. “Without the implementation of these measures the road to recovery from the crisis will be longer and more expensive.”