Last week ISME said that the Government is failing in its communications with the small enterprise sector, and is therefore unable to understand how critical the liquidity situation is for small businesses.
From the Statement on the Economy to Dáil Éireann by Minister Donohoe issued on 20th May, it is clear this comprehension failure continues.
According to ISME CEO Neil McDonnell the liquidity support measures available at the moment suffer a number of issues.
• They are too small, in that support for our indigenous enterprises as a proportion of our national income is dwarfed by the level of support being given by our EU neighbours.
• They are channelled incorrectly, in that SBCI is approving applications which our pillar banks are failing to convert into working capital loans.
• The finance offered is mostly debt finance, at rates that are too high. The most successful scheme in terms of proportion of loans approved, is the MicroFinance Ireland scheme, which has loaned less than €8m in total.
• The headline figures of billions of euro provided are meaningless in the context of the low take-up by SMEs. The figures produced by the Department of Business and Enterprise themselves show the degree of failure of the schemes available. Less than €55m has actually fund its way to Irish businesses in enterprise supports.
The Finance Minister said on May 20th that;
‘Tax receipts will recover, people will return to work and public expenditure will return to more ordinary levels.’
These assumptions are predicated almost entirely on the vast majority of the SME base remaining viable. If workable, adequate liquidity solutions are not put in place in the next days or fortnight, such assumptions will prove dangerously optimistic.
ISME feels it is now appropriate to suggest to the Finance Minister that he should expand the pool of advice available to him in the Department of Public Expenditure and Reform. The broad consensus among the economics community, the trade associations (including those the Minister talks to in the Labour Employer Economic Forum) and the EU Commission is that our enterprise supports are skewed towards mid-cap and PLC enterprises. ISME believes this must change immediately.