We have spoken multiple times recently about the supports available to Irish SMEs in order to help them to weather the current storms facing Irish businesses, but it is an unfortunate fact that not all SMEs will find themselves capable of survival during these times despite their best efforts.
It emerged this week that the last three months has seen up to a 60% increase in the liquidation of SMEs. From Covid recovery to the ever-increasing cost of living, the failure rates of smaller Irish businesses has begun to increase exponentially. PwC have stated in their most recent survey that company failures have increased 14% quarter-on-quarter this year.
This may be result of many of the Covid-specific supports offered to companies being slowly pared back as the country began to reopen after the height of the Covid-19 pandemic. Until early this year, many supports including the EWSS (Employee Wage Subsidy Scheme) were still in place with many companies still availing of the service to support their business. As a result, the combination of less supports and the increase in costs such as fuel and property etc, has seen far more businesses fail, than we saw in the previous year when Covid-related supports were still available. The highest failure rates have been in the health and energy sectors this year so far.
Interestingly, it was also reported that business failures are at a much higher rate in the UK, where Covid-specific supports were removed much sooner than here in Ireland, showing that across the board, there has been a lack of knowledge about just how damaging the pandemic has been to the business world, as well as just how many companies found themselves wholly reliant on these supports.
These failure rates are not yet at their highest, and larger companies currently seem to be weathering the storm better, with the hospitality industry staying strong at present, but insolvency numbers are steadily climbing and cause for concern now that it is realised that there was such reliance on Covid supports to combat financial pressures.
It is not all doom and gloom however as the Government have recently announced an initiative to combat this downturn, and support Irish SMEs. The Government have now launched a new low-cost loan scheme aimed specifically at SMEs to replace the Covid-19 credit guarantee scheme which recently ended. The scheme will allow companies to access one-to-six-year loans ranging from €25,000 and €1.5million.
Tánaiste Leo Varadkar has said of the scheme:
“This successor scheme will give SMEs, including farmers, fishers and food businesses, the option to access really competitively priced loans, should they need to avail of that option, in addition to the other help that is available.”
I hope that this information will be of interest and use to you. Should you have any concerns or queries on any business or financial matters, please don’t hesitate to contact us.