Dáil Éireann Debate, Wednesday - 3 June 2020
463. Deputy Joe Carey asked the Minister for Business, Enterprise and Innovation if she will provide a derogation to SMEs from the de minimis rule in the wake of Covid-19 in view of the fact that indigenous companies that have benefited from grant aid totalling €200,000 over the past three years are ineligible for further business supports at this time; and if she will make a statement on the matter. [9111/20]
View answerOn 19 March 2020, in response to the COVID-19 crisis, the Commission approved a Temporary State Aid Framework to provide greater flexibilities for Member States (MS) to provide support to enterprises impacted by the crisis. Schemes and/or individual aid measures notified under this framework will be processed by the Commission very quickly, usually over the period of a week.
Ireland’s inputs into the development of the Temporary State Aid Framework and subsequent amendments was coordinated by the State Aid Unit in my Department. This included engagement with the Commission on the two subsequent amendments to the Temporary Framework, the first of which was adopted on 3 April 2020 and the second was adopted on 8 May 2020. These amendments have provided Member States with additional options to tackle the economic impact of the Covid-19 crisis.
During the consultation process for the development of Temporary Framework, the State Aid team in my Department requested, along with other Member States, that the de minimis threshold be raised from €200,000 to €500,000. However, the Commission advised that any change to the regulation would take a longer period of time, and therefore be ineffective in dealing with the crisis. However, on the basis of these consultations with MS, the threshold in the Temporary Framework was increased from €500,000 to €800,000.
The purpose of the Framework is to provide temporary, targeted amounts of aid to undertakings that find themselves facing a sudden shortage or even unavailability of liquidity. Aid provided under the Temporary Framework can be cumulated with de minimis aid and other existing state aid measures, provided the provisions of these measures are respected.
The flexibility provided by the Temporary Framework allows aid to be provided to undertakings, including SMEs, who are facing difficulties due to the current crisis without impacting on their individual de minimis thresholds. Undertakings that have reached the de minimis threshold of €200,000 over the past three years will be able to access aid from schemes that operate under the Temporary Framework.
I am conscious that the de minimis threshold for SMEs must be managed and our approach has always been to look at other state aid measures first when developing schemes. It is for this very reason that the €200m Sustaining Enterprise Fund, which is operated by Enterprise Ireland and IDA Ireland and provides repayable advances of up to €800,000 to eligible firms was notified by my Department and approved by the Commission under the Temporary Framework.
Two further supports that have been announced which will operate under the Temporary Framework are the Restart Fund and the COVID-19 Credit Guarantee Scheme. These will operate under the Temporary Framework rather than under the de minimis regulation so as to ensure that those companies who have come close to the €200,000 threshold can still access these supports.
The Restart Fund which is open for applications has been notified by my Department to the Commission on 28 May. The expanded COVID-19 Credit Guarantee Scheme, announced on 2 May, will operate under the Temporary Framework and as such aid granted under these schemes, will not impact on the de minimis thresholds of beneficiaries. This is due to be formally notified to the Commission shortly.
For enterprises that have not yet reached their de minimis aid threshold some of the supports available under the de minimis Regulation are:
- Covid-19 loans of up to €50,000 from Microfinance Ireland for micro enterprises. Loans are available at an interest rate of between 4.5% and 5.5%, with the first six months interest and repayment free. Businesses can apply through their nearest LEO or directly at microfinanceireland.ie;
- The SBCI Covid-19 Working Capital Schemes opened for eligibility applications on 23 March. The maximum loan size under the scheme is €1.5m (first €500,000 unsecured) and the maximum interest rate is set at 4%. Eligibility criteria apply. Applications can be made through the SBCI website at sbci.gov.ie;
- The current Credit Guarantee Scheme supports loans of up to €1m for periods of up to seven years. Applications can be made to AIB, Bank of Ireland and Ulster Bank.
In addition to the new package of liquidity measures announced by the Minister last week, including for micro-enterprises, the full range of Enterprise Ireland, Local Enterprise Office (LEO) and Údarás na Gaeltachta grant and advisory supports continue to be available to eligible firms to help with strategies to access finance, commence or ramp-up online trading activity, reconfigure business models, cut costs, innovate, diversify markets and supply chains and to improve competitiveness. Government will continue to explore funding potential at EU level, as necessary, for all enterprises including micro-enterprises, through funding mechanisms such as the European Regional Development Fund and through the EU’s temporary state aid framework.
My officials will continue to work with the Commission and with our Enterprise Agencies to ensure that enterprises are supported during these extraordinary and difficult times.
