COVID-19: Irish Government Supports for Businesses - April 2020 - Investec
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COVID-19: Irish Government Supports for Businesses April 2020
Introduction
Unprecedented times call for an unprecedented response
This paper provides a summary of the unprecedented assistance package provided by the Irish government to support businesses
through the period of disruption caused by the COVID-19 outbreak. We also highlight how Investec can help your business
navigate this difficult time.
Irish businesses are dealing with significant disruption and uncertainty and will be facing these for an unknown period of time
The lockdown measures taken by the government as well as the large scale equity market sell-off are causing business owners
and managers to reorganise their business and staff, re-evaluate business plans, reforecast cash flows and generally increase
operational flexibility
Businesses are also having to stay on top of the changing landscape of unprecedented initiatives and support packages being
announced by the government – the key questions being: “are we eligible and how can we access it?”
Access to capital and liquidity in these difficult times is extremely important and navigating the conventional markets, whether
debt or equity, can be complex and time consuming
Investec is here to support you through this difficult time to help navigate the different government packages available
Confidential | 2Overview of key initiatives
The Irish government has introduced a number of unprecedented new measures in order to support
business throughout the period of disruption caused by the COVID-19 outbreak
1 6
Temporary Wage Subsidy Scheme Sustaining Enterprise Fund
A refund available to employers which keep their employees on the payroll Support to all SMEs / large companies who employ 10 or more employees
and who have lost 25% of their trade due to the Covid-19 outbreak and operate in manufacturing and internationally traded services
70% of employees wages will be paid up to a maximum of €410/week Repayable advances of up to €800,000 will be available to qualifying
(c.€38,000 p.a.) per eligible employee companies
2 7
SBCI Covid-19 Working Capital Loan Scheme Rescue and Restructuring Scheme
Support to SMEs via access to loans of between €25,000 and €1.5m Enterprise Ireland have made available a fund for vulnerable but viable
Maximum interest rate of 4.0% firms that need to restructure or transform their businesses
These loans will be available through AIB, Bank of Ireland and Ulster Bank Level of support provided will be between €100,000 and €3m
3 8
SME Credit Guarantee Scheme Microfinance Ireland Covid-19 Business Loan
Support to SMEs unable to access credit due to three distinct barriers A loan specifically for micro businesses which are not in a position to avail
Loans of between €10,000 and €1m will be available through AIB, Bank of of finance from Banks and other commercial lending providers and can
Ireland and Ulster Bank show a loss of 15% of projected turnover or profit
Flexible terms available on loan term, facility type and repayment Loans available from Microfinance Ireland of between €5,000 – €50,000
4 9
Bank Supports Revenue Supports
Agreement made between the Irish government and all finance providers Support is available from Revenue for businesses which are facing
to defer loan repayments on existing debt for three months if required temporary cash flow difficulties due to the Covid-19 outbreak
These finance providers may be able to provide emergency working Please see Appendix 6 for detailed revenue support information
capital facilities if required
5
Future Growth Loan Scheme
Loans provided to SMEs for long term investment – This SBCI scheme
was allocated additional funding as part of the Covid-19 response
Loan amounts from €100,000 to €3m
Long term funding – 8 to 10 year terms
Confidential | 3Initiative details (I/IV)
Scheme Eligibility Details Access Duration
Temporary Wage All Irish businesses Employers will be refunded 70% Employers should The scheme will run
Subsidy Scheme which can show that of employees’ wages if kept on apply on the for 12 weeks from
they have lost at least payroll Revenue website 26 March 2020
25% of their trade as a
result of Covid-19 This subsidy is capped at
measures €410/week (c.€38,000 p.a.)
The subsidy offers at reduced
rate for higher earners, capped
at net €350 for incomes between
€38,000 and €76,000
SBCI Covid-19 Working Viable micro, small and Loan amounts of between The loans will be The scheme
Capital Loan Scheme medium sized €25,000 to €1.5m per eligible available through operates until March
enterprises (SMEs) and enterprise AIB, Bank of Ireland 2021 or until the
Small Mid Cap and Ulster Bank scheme has been
enterprises (Standard Maximum interest rate of 4.0% fully subscribed
EU definition - Appendix
1) Loan terms from 1 - 3 years
The business must also Unsecured up to €500,000
satisfy Covid-19
Criterion (Appendix 2) Optional interest-only
repayments may be available at
The business must also the start of the loans.
satisfy one of 11
Innovation Criterion The loan amount and term is
(Appendix 2) dependent on the loan purpose.
Confidential | 4Initiative details (II/IV)
Scheme Eligibility Details Access Duration
SME Credit Guarantee SME’s which are unable Facilities of €10,000 up to €1m The facilities will be Seven years from
Scheme to access credit because available through date the
of three distinct barriers Terms of up to 7 years AIB, Bank of Ireland participating entity
to lending: and Ulster Bank signs the letter of
Term Loans, Demand Loans and offer.
Inadequate collateral Performance Bonds The scheme will only
be available through
Novel business market, Potential to avail of between a finance providers
sector or technology three to six-month interest-only which meet thorough
which is perceived by payment period (depending on application/due
lenders as higher risk the total loan duration) diligence process
under current credit risk designed to mitigate
evaluation practices risks to Irish
taxpayers, European
Need for refinancing funders and to SME
caused by the exit of an borrowers
SMEs lender from the
Irish Market
Bank Supports Any business which 3 month repayment deferrals on Available from 3 months from 26
holds existing bank debt existing bank debt, agreed in current finance March 2020
with any Irish finance conjunction with banking sector. provider of business
provider
Banks may be able to provide
emergency working capital
facilities if required
Confidential | 5Initiative details (III/IV)
Scheme Eligibility Details Access Duration
Future Growth Loan SMEs and Small Mid Loan amounts from €100,000 to Eligibility for scheme Three year period or
Scheme Cap enterprises €3m to be assessed by until the scheme has
(Standard EU definition - SCBI been fully
Appendix 1) Initial maximum loan interest subscribed
See Appendix 3 for rate of 4.5% for loans < The loans will be
further details Loans to be used for €250,000; 3.5% for loans >= available through
long term investment – €250,000. AIB, Bank of Ireland,
equipment, R&D, Ulster Bank and KBC
expansion, innovation Loan terms from 8 to 10 years
Unsecured loans up to €500,00
€180m Sustaining SMEs / large companies Businesses qualifying under this The funding is TBD
Enterprise Fund which employ more than EU supported scheme will be accessible through
10 full time employees offered a repayable advance or Enterprise Ireland
of up to €800,000
See Appendix 4 for Operate in the Evidence of
further details manufacturing and The qualifying business must application for
internationally traded provide a Business Sustainment funding through
services sectors Project Plan outlining the SBCI or financial
eventual stabilisation of the institutions required
Must show that 15% of business and return to viability
actual (or projected)
turnover or profit is 4% annual administration fee
negatively impacted by
COVID-19 and / or Repayment of advance payment
significant increase in by end of year 5, allowing for a
costs 3-year grace period
Confidential | 6Initiative details (IV/IV)
Scheme Eligibility Details Access Duration
Rescue and Vulnerable but viable Two main supports – Temporary The funding is September 2021
Restructuring Scheme firms that need to Restructuring Support or accessible through
restructure or transform Restructuring Aid Enterprise Ireland
their businesses
See Appendix 5 for Level of support provided The funding may
further details expected to be in the range of only be available to
between €100,000 and €3m Enterprise Ireland’s
current clients
Microfinance Ireland Any business with less Loans from €5,000 – €50,000 Available from TBD
Covid-19 Business than 10 employees and Microfinance Ireland
Loan turnover of < €2m Loan terms typically up to 3
years
Any business not in a
position to avail of First 6 months – interest &
finance from Banks and repayment free
other commercial
lending providers No fees/no hidden costs/charges
Must show that 15% of Fixed repayments/no penalty for
actual or projected early repayment
turnover or profit is
impacted by COVID-19
Revenue supports All Irish businesses Revenue will engage with any Guidance is available TBD
facing cash flow viable business that experiences from Revenue
See Appendix 6 for difficulties temporary cash flow difficulties (Contact information
further details in Appendix 6)
Confidential | 7How our Corporate Advisory Team can help you
Investec is well positioned to support you and your business throughout this difficult period
Access to government business support initiatives
Working with you to understand how the initiatives work, what you are eligible for and how to access them
Access to capital and liquidity
Providing advice on how to access capital and liquidity from all available sources
Business financial review
Helping you analyse your financial position including cash flow forecasting, business plan analysis and financial model
sensitivity analysis
Strategic advice
Advising on how to optimally position your business to navigate the changing environment most effectively and
providing advice on raising of equity and / or debt as well as M&A, whether you are considering selling a division or the
whole business
Confidential | 8Appendices
Appendix 1 – Definitions
SME - SMEs are defined by the European Commission as having less than 250 persons employed. They should also have an annual turnover of up to
EUR 50 million, or a balance sheet total of no more than EUR 43 million, are independent and autonomous i.e. not part of a wider group of enterprises,
have less than 25% of their capital held by public bodies and are established and operating in the Republic of Ireland
Small Mid-Cap Companies - an enterprise that is not an SME but has fewer than 500 employees
Appendix 2 – Criteria for SBCI Covid-19 Working Capital Loan Scheme
Covid-19 Criterion - The business is impacted by the Covid-19 virus resulting in business turnover/profitability being negatively impacted by a minimum
of 15%
Innovation Criterion :
1. At least 80% of the Scheme Loan will be spent on research and innovation activities associated with your response to the COVID-19 challenge with the
remainder on costs necessary to enable such activities.
Evidence required from applicant: The business plan given to the finance provider must reflect the details of the expenditures and activities to
be undertaken.
2. You intend to enter a new product or geographical market, and the required investment is higher than 50% of average annual turnover in the preceding 5
years.
Evidence required from applicant: The business plan given to the finance provider must reflect details of the expenditures.
3. You will have registered at least one technology right in the last 24 months and the purpose of the loan is to enable use of this technology right.
Evidence required from applicant: Evidence of technology right e.g. patent, utility model, design right, protection certificates.
4. You are an SME and research and innovation costs represent at least 10% of total operating costs in at least one of the last three years preceding this
application, or in the case where there is no financial history, as per current financial statements.
Evidence required from applicant: Costs to be certified by an accountant practising in the Republic of Ireland.
5. You are a Small Mid-Cap and research and innovation costs represent either: -
a. at least 15% of total operating costs in at least one of the three years preceding this application.
b. at least 10% per year of total operating costs in the three years preceding this application.
Evidence required from applicant: Costs to be certified by an accountant practising in Republic of Ireland.
Confidential | 9Appendices Appendix 2 – contd. 6. You have been awarded a Research and Development or Innovation prize by an EU Institution or EU Body over the last 24 months. Evidence required from applicant: Appropriate evidence of prize. 7. You have received a grant, loan or guarantee from a European research and innovation scheme (e.g. Horizon 2020 or FP7) or regional/national research or innovation support scheme in the last three years, and are confirming that the loan is not covering the same expense Evidence required from applicant: Appropriate evidence of the grant, loan or guarantee. 8. You are an early stage SME and have received an investment over the last 24 months from a venture capital investor or business angel. Evidence required from applicant: Appropriate evidence of the investment to be provided. 9. You intend to use the loan to invest in producing, developing or implementing new or substantially improved products, processes or services or production or delivery methods (including business models) that are innovative, and where there is a risk of technological, industrial or business failure as evidenced by an external expert. Evidence required from applicant: The business plan must demonstrate those risks of failure and evaluated by an external expert e.g. an accountant, engineer, the finance provider. 10. You are a “fast growing enterprise” operating for less than 12 years with an average annualised employee or turnover growth greater than 20% a year, over a three year period and with ten or more employees at the beginning of that period. Evidence required from applicant: Evidence to be certified by an accountant practising in Republic of Ireland. 11. You are operating in a market for less than seven years and research and innovation costs represent at least 5% of total operating costs in at least one of the three years preceding the loan application or in the case of an enterprise (and particularly a startup) without any financial history, according to current financial statements. Evidence required from applicant: Costs to be certified by an accountant practicing in Republic of Ireland. Confidential | 10
Appendices Appendix 3 – Future Growth Loan Scheme Loan Features: Loan amounts from €100,000 to a maximum of €3,000,000 per applicant Initial maximum loan interest rate of 4.5% for loans < €250,000 and 3.5% for loans >= €250,000. Variable interest rates are subject to change Loan terms ranging from 8 to 10 years Unsecured loans up to €500,000 Optional interest-only repayments available in certain circumstances An “Applicant” is an SME or small Mid-Cap that applies for a loan under the FGLS. Applicants for loans greater than €250,000 must submit a business plan to the relevant Financial Institution. Loan Purpose: Loans can be used for long term investment. Applicants must choose one of the below loan purposes: Investment in Machinery or Equipment Investment in Research and Development Investment in Business Expansion Investment in Premises Improvement Investment in Process Innovation Investment in People and/or Systems Example case studies are set out on the SBCI website Who can apply: Applicants must be viable micro, small and medium sized enterprises (SMEs) and Small Mid-Cap enterprises – see Appendix 1 for definitions How to apply for a loan The Applicant must first submit an Eligibility Application Form to the SBCI to check if it is eligible to apply. If the SBCI determines that the Applicant is eligible it will confirm that to the Applicant in writing. The Applicant must provide this eligibility confirmation letter to the relevant Financial Institution when applying for a loan. Confidential | 11
Appendices
Appendix 4 – Sustaining Enterprise Fund
This €180m Fund is open to eligible companies which:
Employ 10 or more full time-employees
Are operating in the manufacturing and internationally traded services sectors
For SMEs - have applied for funding from a financial institution, including, where appropriate, through the SBCI COVID-19 Working Capital Loan/Future
Growth Loan Schemes
For large companies – have applied for funding with an appropriate financial institution.
Terms:
Repayable funding of up to €800,000 available
Funding to be repaid subject to the project objectives being achieved
An annual administration fee of 4%.
The funding to be repaid as follows:
3-year grace period
Repayment by the end of year 5, on successful achievement of the project objective.
Businesses will be required to submit a Business Sustainment Plan as part of their application for funding. The plan should set out, if implemented, that it
can lead to a stabilisation of the business and a return to viability.
The Business Sustainment Plan must identify the extent of the immediate liquidity needs and outline how support provided through the proposed measures
will remedy the company’s immediate problems.
Eligible businesses must have seen a negative impact arising from the Covid-19 outbreak and also have seen (or expect to see) a 15% or greater reduction
in actual or projected turnover or profit, or a significant increase in costs, as a result of Covid-19.
In order to apply for the Sustaining Enterprise Fund, eligible companies will need to provide:
A Business Sustainment Plan which details the business project plan, which if fully implemented, will enable the company to be financially viable
Evidence of application for funding through the SBCI or financial institutions
Evidence of the need for Covid-19 support funding
Identification of the sources of additional funding required to fully implement the Business Sustainment Plan
Evidence of a drop of 15% or more (or projected) in income arising from the Covid-19 situation.
Confidential | 12Appendices
Appendix 5 – Rescue and Restructuring Fund
The fund is designed to support businesses in difficulty and/or companies facing acute liquidity needs, in line with the relevant EU guidelines, to restructure
their business. Funding is available to SMEs which have tried and failed to secure funding from the market and there are two main supports:
Temporary Restructuring Support
The Temporary Restructuring Support provides assistance to businesses in difficulty and/or companies facing acute liquidity challenges, due to exceptional
and unforeseen circumstances. Funding is provided to support the restructuring of a company and will take the form of a loan with a term of up to 18
months.
Support will only be provided to eligible companies where they have been unable to secure funding from the market
Loans are expected to be in the range of between €100,000 and €3m
The support must achieve a well-defined objective of common interest and eligibility will be determined on a case-by-case basis
Companies must have started operating in their current sector more than 3 years previously.
Restructuring Aid
This equity-based support is provided to restore the viability of a business undertaking a far-reaching restructuring plan within a reasonable timescale.
The scheme is open to SMEs which are in financial difficulty
The aid will take the form of a co-funded equity investment against a Restructuring Plan. A company contribution of between 25% and 40% of the costs
of the restructuring plan will be required
The level of support will be between €100,000 and €3m
The aid must achieve a well-defined objective of common interest and eligibility will be determined on a case-by-case basis
Companies must demonstrate that they have been unable to secure capital from the market.
Confidential | 13Appendices
Appendix 6 – Revenue Support
Revenue supports:
VAT repayments
PSWT refunds
Early payment of 2020 instalments of excess Research and Development (R&D) Tax Credits
Suspension of audits and other compliance intervention activity
Critical pharmaceutical products and medicines will be given a Customs ‘green routing’ to facilitate uninterrupted importation and supply
Cancellation all VRT registration and export appointments
Current Tax Clearance status will remain in place for all businesses over the coming months
Suspension of relevant contract tax reviews
Revenue contact information
Guidance is available from Revenue online at www.revenue.ie or via telephone on National Employer Helpline: 01 738 3638 or ROS Technical
Helpdesk: 01738 3699
Confidential | 14Contacts Corporate Finance Liam Booth Shane Lawlor Tommy Conway Jonathan Simmons Eoin Kennedy liam.booth@investec.ie shane.Lawlor@investec.ie tommy.conoway@investec.ie jonathan.simmons@investec.ie eoin.kennedy@investec.ie T: +353 1 421 0345 T: +353 1 421 0347 T: +353 1 421 0358 T: +353 1 421 0351 T: +353 1 421 0386 M: +353 86 8073904 M: +353 86 2841805 M: +353 87 6187842 M: +353 87 6370984 M: +353 87 986 3426 Treasury Aisling Dodgson Philip Ahearne Peter Ellis Gearoid Keegan Alan Harrison aisling.dodgson@investec.ie philip.ahearne@investec.ie peter.ellis@investec.ie gearoid.keegan@investec.ie alan.harrison@investec.ie T: +353 1 421 0084 T: +353 1 421 0128 T: +353 1 421 0223 T: +353 1 421 0098 T: +353 1 421 0086 Mark O’Brien mark.obrien@investec.ie T: +353 1 421 0091 Private Client Lending John McWeeney David Gilligan Helen Fitzgerald Ciaran Leddy john.mcweeney@investec.ie david.gilligan@investec.ie helen.fitzgerald@investec.ie ciaran.leddy@investec.ie T: +353 1 421 0005 T: +353 1 421 0433 T: +353 1 421 0050 T: +353 1 421 0108 Economics Ronan Dunphy ronan.dunphy@investec.ie T: +353 1 421 0468 Chief Executive Officer Michael Cullen michael.cullen@investec.ie T: +353 1 421 0074 Confidential | 15
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