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Covid-19 Pandemic Supports

Dáil Éireann Debate, Wednesday - 27 May 2020

Wednesday, 27 May 2020

Questions (413)

Seán Fleming

Question:

413. Deputy Sean Fleming asked the Minister for Business, Enterprise and Innovation the plans she has put in place for the reopening of hairdressing salons and barber shops throughout the country in view of the fact they will only be able to open at a dramatically reduced capacity and that the wage subsidy scheme is due to expire on 16 June 2020, but these businesses are not expected to be reopened until 20 July 2020; if a fit-for-purpose scheme to help cash flow rather than the complicated schemes through the Strategic Banking Corporation of Ireland will be put in place; if she will examine models internationally with a high rate of approval for cash flow and assistance during the months after reopening; and if she will make a statement on the matter. [7313/20]

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Written answers

Since 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.

I would stress that the application process for these SBCI schemes is not onerous. Businesses need only confirm their eligibility for the scheme by application through the SBCI website. After a successful application, they will be issued an eligibility reference number, which they can use to make an application for a loan from one of the participating finance providers.

As of 21 May, of the 2,591 applicants for eligibility under the scheme, only 13 had so far been found to be ineligible. The SBCI has also put in place a helpdesk that responds to any queries arising around the application process.

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).

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 €2bn 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.

Across the EU, different member states have prioritised different features of their respective liquidity supports to businesses, and so a direct comparison may not be appropriate. However, from the data available, Ireland’s loan guarantee schemes appear to be in line with many countries: they cover 80% of the loan value, at commercial or slightly lower rates.

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.

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