Dáil Éireann Debate, Wednesday - 27 May 2020
401. Deputy Brendan Griffin asked the Minister for Business, Enterprise and Innovation if additional measures will be put in place to support the hairdressing industry (details supplied); and if she will make a statement on the matter. [7096/20]
View answerSince the beginning of the Covid-19 crisis, Government has worked to ensure that a suite of supports is in place to help businesses negatively impacted by both the outbreak and the measures introduced to mitigate the spread of the contagion. I am conscious that, for practical reasons, the impact on some businesses has been particularly severe. On Wednesday, 20 May I had a meeting via conference call with representatives of the hair and beauty and barber industry to discuss the implications of Covid-19 for their businesses.
With specific regard to queries around cashflow and working capital, the SBCI Covid-19 Working Capital Scheme opened for eligibility applications on 23 March and currently makes available a fund of up to €200m to eligible businesses that have been negatively affected by impacts arising from the outbreak of Covid-19 to enable those businesses to innovate, change or adapt in response to the current business environment. The scheme is offered by my Department in cooperation with the Department of Agriculture, Food and the Marine. The scheme is operated by the SBCI.
Following my announcement on 8 April, this scheme is now being expanded to make available an additional €250m in lending, which will bring the total amount of lending available under this scheme to €450m.
Funding under this scheme is offered at favourable terms and at a lower interest rate than other similar SME lending available in the market. The maximum interest rate under the scheme is 4% and loans of up to €500,000 are available unsecured. Applicants may also be able to avail of a three-month interest-only payment period (depending on your lender’s assessment of your application).
There are significant advantages to operating these loan guarantee schemes through participating financial providers. This allows the Government to leverage existing commercial lending infrastructure to provide an efficient mechanism for making competitive lending products available to Covid-19-impacted businesses. The guarantee structure ensures that eligible applicants to the schemes represents a reduced risk to the participating lender, which in turn ensures access to appropriate financing for more businesses.
However, the operation of these loan schemes through the financial providers also means that interest is a feature of the loans, as some interest must be charged by the lenders to cover overheads and capital costs if they are to continue to work with Government.
For micro-enterprises (businesses with fewer than 10 employees), the Covid-19 Loan, available from Microfinance Ireland (MFI), has been introduced as a support to help businesses affected by the Covid-19 crisis to access funding.
These loans are available for eligible microenterprises responding to Covid-19-related difficulties, the negative impact of which must be a minimum of 15% of actual or projected income or profit. Loans up to €50,000 are available with terms that include a six-month interest-free and repayment-free moratorium, with the loan to then be repaid over the remaining 30 months of the 36-month loan period. These loans are available at an interest rate of 4.5% to all micro-enterprises where the application is made through the network of Local Enterprise Offices around the country, or where referred by a bank or Local Development Committee. An interest rate of 5.5% is applied to loans sought directly through MFI.
In terms of new supports, on 2 May, I announced a €2billion Credit Guarantee Scheme to support lending to SMEs for terms ranging from three months to six years. Loans under the scheme will be offered at below market interest rates, and the scheme will support a variety of credit facilities.
A number of additional measures to aid the economy as the Covid-19 restrictions start to be lifted were also outlined on 2 May. These included:
- A three-month commercial rates waiver for impacted businesses;
- A €2 billion Pandemic Stabilisation and Recovery Fund within the Ireland Strategic Investment Fund (ISIF), which will make capital available to medium and large enterprises on commercial terms;
- The ‘warehousing’ of tax liabilities for a period of twelve months after recommencement of trading during which time there will be no debt enforcement action taken by Revenue and no interest charge accruing in respect of the warehoused debt;
- A commitment to local authorities to make up the rates shortfall, so that local authorities can continue to provide full services to the public.
I have also recently announced a new €250m Restart Fund, which will be a critically important tool in supporting small businesses as they begin to reopen. This fund will provide up to €10,000 to micro and small businesses and will be implemented either through a rebate or waiver scheme based on rates payment for 2019, and will be targeted more widely at micro and small enterprises that have suffered large falls in revenue as a result of the crisis. These recently announced supports will help businesses affected by Covid-19 to address a range of credit needs.
