Wednesday, May 22, 2024

Enterprise minister hints at new package for SMEs despite underwhelming number of applicants for a separate support

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Newly appointed Enterprise Minister Peter Burke suggested additional SME supports are being ironed out by government despite underwhelming application figures for the Increased Cost of Doing Business Grant among small firms.

Mr Burke said his department is working with Social Protection Minister Heather Humphreys and Minister for Higher Education Patrick O’Donovan “to put a package on the table for the SME sector”, details of which are set to emerge by the end of this month.

While speaking on Morning Ireland on RTÉ Radio 1, Mr Burke also added that there are more businesses opening than closing in the Republic and firms are maintaining record low unemployment. 

However, as covid-19 business supports are being wound up and an election looms, government is under pressure from business representative groups to deliver additional support measures. 

The Increased Cost of Business grant (Icob) is part of a government Budget package of €257m that will give eligible businesses a once-off grant payment as a contribution towards the rising costs faced by businesses.

The grant is based on the value of the commercial rates bill received by an eligible business in 2023 and the deadline for applicants is May 1.

For qualifying businesses with a 2023 Commercial Rate bill of less than €10,000, the Icob grant will be paid at a rate of 50% of the business’s commercial rate bill for 2023.

Several firms have told the Irish Examiner in recent weeks they have witnessed a surge in their commercial rates charged for 2024, but these will not be taken into account for Icob.

Chief executive of business representative group Isme Neil McDonnell argued that many businesses don’t pay these rates themselves and it is likely their landlord pays commercial rates, making some firms ineligible for the grant which led to low uptake. 

Meanwhile businesses have been availing of another support measure as costs continue to bite. 

There was a jump in applications for Phased Payment Arrangements (PPAs) ahead of the May 1 deadline to address remaining warehoused debt.

Revenue, which is responsible for the PPAs, said over 8,600 payment arrangements were set up on the system by 4:30pm on Tuesday April 30.

“Where a business fails to meaningfully engage with us, the balance outstanding will immediately be subject to standard debt collection proceedings and the standard interest rate of 8% to 10% will apply,” Revenue warned.

The Revenue said “there is no expectation on businesses to pay their warehoused debt in full” by the end of May 1, but if firms want to benefit from the 0% interest rate applicable to warehoused debt, “businesses must engage with us in a meaningful way by this key date.”

The vast majority of the debt in the warehouse is owed by just over 15,000 business and 75% of the €1.5bn left in the debt warehouse is either paid in full or under PPA.

“We are actively progressing a further 1,700 PPA applications at present,” the Revenue said in a statement.

“We expect that businesses will continue to finalise payments and submit payment proposals this evening and tomorrow,” the Revenue said.

Revenue added that the collector general’s division will continue to work on payment plans until May 3 “given the increasing levels of engagement.” 

The Debt Warehousing scheme was established during pandemic to help businesses cope with impact of lockdowns on their operations.

Finance Minister Michael McGrath reduced the interest on the warehoused debt to zero as government came under pressure from lobby groups to provide further support to firms struggling amid a high cost environment for business operators.

Mr McGrath maintained he will not budge on the issue of hospitality Vat though. Many industry representatives have called for this Vat rate to be reduced from 13.5% to 9% to support service industry providers.

However, implementing this measure would be costly for the Exchequer in the long run.

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