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Covid-19 Pandemic Supports

Dáil Éireann Debate, Tuesday - 14 July 2020

Tuesday, 14 July 2020

Ceisteanna (50)

Mairéad Farrell

Ceist:

50. Deputy Mairéad Farrell asked the Tánaiste and Minister for Business, Enterprise and Innovation if measures are being put in place to ensure that companies with sufficient cash reserves are not unnecessarily availing of Covid-19 financial support thus reducing the pool of funds available for those companies that need it. [15767/20]

Amharc ar fhreagra

Freagraí scríofa

The Deputy will be aware that there is a delicate balance to be struck between providing necessary survival assistance to firms and ensuring that both deadweight and displacement are avoided.

The vast majority of businesses are microenterprises, estimated at over 200,000, employing less than 10 people and certainly evidence suggests that these firms will not be in a position to meet urgent liquidity needs from their internal resources, including cash reserves without additional support.

Such assistance and the design of measures to help business, as I stated, involve delicate trade-offs in their selection and design to ensure that the overall costs do not outweigh the benefits.

The State-supported loan schemes operated by the Strategic Bank Corporation of Ireland, namely the COVID-19 Working Capital Scheme, the Future Growth Loan Scheme and Credit Guarantee Scheme and the MicroFinance Ireland (COVID-19 Business Loans), make lending available to businesses that have been negatively impacted by the outbreak of COVID-19. These are loans and must be repaid with interest. It is therefore advantageous for businesses with sufficient cash reserves to continue to operate from those reserves, rather than to avail of these supports and incur additional costs.

In relation to Enterprise Ireland and the Local Enterprise Offices, there are specific criteria laid down for each scheme of support and companies must meet these criteria to be successful in their applications.

These supports are part of the overall package of Government support measures for enterprise, and are designed to meet funding needs that cannot be met elsewhere (whether from the company itself or other funding providers).

Enterprise Ireland financial supports for COVID-19 have the objective of supporting companies impacted by COVID-19 to access liquidity and to underpin their long-term viability.

The Sustaining Enterprise Fund of up to €800k, for example, is structured to support a co-financed business stabilisation plan. There is a robust due diligence process in place. In that regard, specific criteria are examined during the application and decision-making process which include the impact that COVID-19 has had on the company and the company’s liquidity or funding need. Included are considerations as to how individual firms might respond to that impact and to rebuild the company’s financial position including the ability of the company to access funding from other sources. The proposal for funding is submitted to Enterprise Ireland’s Investment Committee which is composed of both internal members from Enterprise Ireland, external private sector members and Departmental Officials which ultimately approves the funding to the company.

For LEO grant applications, the applicants have to provide certified accounts if already in business. Their financial health, including cash reserves, is evaluated by the Local Enterprise Office Evaluation and Approvals Committee (EVAC) when considering a grant proposal. Under the assessment criteria, evaluation committees’ pay due regard to the general principle of need for necessary funding to ensure the establishment or development of the enterprise including whether there is sufficient cash available that would support a project without state support.

As stated in the Programme for Government, we will bring forward a July stimulus to assist businesses to remain open, to encourage economic growth and to help restore employment. Our focus is to support the viability of the business and enterprise sector and to get people back to work as quickly as possible in all sectors.

Helping our SMEs is central to this, given their pivotal role in the economy and employment growth. The July Stimulus will extend, enhance and add to the existing measures totalling €12bn in supports for COVID-19 impacted businesses already announced.

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