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Score One for SMEs

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For the past few months, the term Brexit has acted as somewhat of a Bogeyman figure looming over many Irish business as the haze of uncertainty for what a British exit from the European Union would mean for Irish borders and trade with the UK, on which many companies rely. Perhaps the most concerning idea for Irish businesses would be what this would mean for Irish Small and Medium Enterprises (SMEs). We have spoken at length in the past about how important the SME sector is in Irish business, forming the backbone of our economy, and how vital it is to protect these types of businesses in changing times. Many Irish SMEs rely on business with the United Kingdom and so a cloud of uncertainty and insecurity has plagued the sector in recent months.

 

Recently, we have spoken about new funding opportunities coming to light for SMEs and this week it appears that the future may be beginning to look even brighter for these vital enterprises. The Minister for Employment and Small Business Pat Breen has urged SMEs and micro businesses to turn to their Local Enterprise Offices (LEO) for information about a range of supports now available to them. A newly announces suite of Brexit supports is now available to SMEs and microbusinesses through their Local Enterprise Offices which include

  • Access to the ‘Brexit SME Scorecard’ online tool where micro and smaller businesses can self-diagnose their readiness for Brexit – A vital planning tool which may assist many small businesses.
  • A ‘Technical Assistance for Micro-enterprises’ grant to help LEO clients to find new markets and exports.
  • Rollout of ‘Lean for Micro’ nationwide which will make small businesses more efficient and competitive.
  • A ‘LEO Innovation and Investment Fund’ pilot programme to support innovation in micro-enterprises and get them investor ready to scale their businesses.
  • Tailored mentoring to address Brexit related business challenges.
  • Training on specific Brexit challenges, including financial aspects.

As you can see from this list, these supports are specifically aimed at providing information and a framework of support and guidance for these businesses to utilise when navigating the uncertain times ahead. Minister Breen was quoted as saying of the support:

“I am delighted to announce this suite of important Brexit supports which will be available for small and medium enterprises. It is imperative that micro and small businesses have the tools and supports needed to navigate through what is uncharted territory. This is part of the Government’s Brexit planning and I am very pleased that my Department through Enterprise Ireland has been able to accelerate the rollout of these new LEO offerings worth up to €3.4 million, and I urge small and micro business owners to get in touch with their LEO to see how they can help.” 

These supports focus heavily on planning ahead which will be vital in the coming months for all businesses. Should you require further information, guidance or assistance please give us a call.

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~ DCA PARTNERS, DECLAN DOLAN & EAMONN GARVEY

Are you Talkin’ to SME?

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We have spoken in the past about the dearth of financing options for Small and Medium Enterprises in Ireland following the recession. Recently, there seems to be a push towards recognising the importance of SMEs as the backbone of our economy and as such, the need for available funding to ensure their continued success.

One such form of funding of which Ireland has seen very little in recent years is ‘Peer to Peer’ (P2P) lending. The term might bring flashbacks of desperately attempting to download your favourite songs on a dial-up connection but rest assured this is a far more functional process. Peer to Peer lending is now one of the most popular methods of funding a business or idea (think Kickstarter, IndieGoGo etc. these options are also known as ‘crowdfunding’). The process allows ordinary individuals with cash to invest be ‘matched’ with a business seeking finance. The entire process is done online which reduces overhead costs and generally makes for a smoother and cheaper lending process for both parties.

One such Irish Peer-to-Peer lender, Linked Finance has recently received full authorisation by the UK’s Financial Conduct Authority (FCA) to allow the company to enter into the UK Market. Linked Finance’s CEO Niall Dorrian was quoted as saying the following about the authorisation:

“I am very pleased that we have secured full FCA approval. It puts us ahead of the curve in terms of preparing for any regulation of the sector in Ireland. It also demonstrates to lenders and borrowers here at home that Linked Finance operates to the highest standards.”

The authorisation is well timed for Linked Finance as our own Department of Finance has initiated a public consultation process with the view of imposing some regulations on Peer-to-Peer lending in Ireland, aiming to make this a safer process for all parties. The UK already has a comprehensive regulatory procedure with regard to P2P lending, and it is thought that Irish practises will begin to follow suit as P2P lending grows in popularity here. The UK also already has many options in place for funding SMEs which Ireland may eventually follow suit on given that these enterprises make up such a large chunk of our business.

Linked Finance have already facilitated more than €25m in loans to Irish SMEs and it is hoped that in the future there will be a marked increase in lending options for SMEs as they continue to be the backbone of our economy. Linked Finance in particular hope that any kind of regulation will be a help to the sector rather than a hindrance as CEO Dorrian has said:

“Any regulation of the sector in Ireland should seek to encourage, rather than inhibit, further diversification within the financial landscape.”

For now, at least, times seem to be changing positively for Irish SMEs and long may this last.

Should you have any queries or require further information on this or any other business or financial matter please don’t hesitate to contact us here at EcovisDCA’s new head office, where as always we will be delighted to help.

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~ DCA PARTNERS, DECLAN DOLAN & EAMONN GARVEY

FUNDING THE WAY IN THE DARK

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Following the economic downturn, one of the largest business groups to suffer were Small and Medium Enterprises (SMEs). A key component of these types of businesses is often their reliance on funding options and flexible payment terms in order to gain and keep a decent foothold in their area of business. Following the Irish economic crisis, many SMEs were unable to continue their operations due to a reduced availability of finance options. This lack of financing availability also meant that many start-ups were unable to get off the ground during this time.

 

 

Now that the Irish financial situation is apparently on the up, there has been an increased focus by funders and the government on entrepreneurship and SMEs. This is a fantastic starting point and is largely due to the fact that these types of businesses make up for over half of all Irish businesses, and have become somewhat of a backbone for Irish businesses. Recently, it has been reported that more funding options will soon be returning to the Irish market targeting SMEs in particular.

The welcome news recently for Irish SMEs is that one such form of financing which disappeared is set to make a comeback to the Irish market. Supplier Finance is now once again an available option in Ireland, offering financially secure Irish SMEs this method of paying key suppliers whilst accessing previously unavailable cash flow. Supplier Finance is said to be an ideal additional top-up for companies who have hit their banking limit as it will not interfere with any already existing funding plans.

Also known as supply chain finance optimises cash flow by allowing businesses to extend payment terms to suppliers whilst ensuring that suppliers are paid in full. This creates an optimal environment for both buyer and supplier. The additional benefit of this form of finance which lead to its popularity during boom times was that it allows the supplier access to additional cash flow that would otherwise be tied up elsewhere and minimises the risk of financial issues elsewhere in the payment chain.

 

 

Supplier finance is different to other finance options in that it is not a loan, but rather an extension of the accounts and is not considered to be a debt, suppliers receive full payment for their products. This makes supplier financing a very attractive option for a great many financially stable Irish SMEs.

Financially secure companies who have not been suitable for options such as Invoice Finance will be able to avail of this funding option which will be a welcome change for those in difficult to fund sectors.

Should you require any more information, advice or guidance on these or any other business or financial issues, please do not hesitate to contact us here at DCA Accountants where we will be happy to be of service.

 

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~ DCA PARTNERS, DECLAN DOLAN & EAMONN GARVEY

WHAT’S A FACEBOOK WHEN IT’S AT HOME?

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With small and medium enterprises (SMEs) making up a generous portion of all Irish businesses currently, we have spoken at length about the many and varied issues which face these companies. There are a great many difficulties to be faced in setting up and ensuring the continued thriving of a small business, and often it can seem like there are very limited helpful tools at your disposal. Today, we are going to focus on the positives considering how integral SMEs are to the Irish economy, now is a good time to take into consideration how these companies can utilise available tools to ensure the success of your small or medium business from the outset.

 

One of the greatest tools at any company’s marketing disposal at present are those largely free channels which allow a company to get their message to a wider audience known as social media. As we have discussed previously, social media and website marketing can be a key tool for companies of all sizes, with video marketing seeing a massive surge in popularity across social media in recent years. Social media can be a tricky tool to get a handle on at first, but could well be the key to getting more customer traffic into your business.

 

So what happens if you happen to not be the most internet or media savvy small business owner? Finally, there might be assistance on the horizon for you to empower you to harness the power of this medium. Recently, smaller Irish companies have been encouraged to contact their local Enterprise Office to gain assistance in building or improving an online presence for their company.

 

An initiative through your local Enterprise Office can help you unlock the online potential of your business by offering training and the ability to apply for a grant of up to €2,500 to build or update your website. If this seems like an ideal solution to your company’s tech worries, the only condition is that your small business must have fewer than 10 employees. If this is the case, we would advise contacting your local Enterprise Office to find out what your options are and watch your business grow as a result. As it has been estimated that approximately 90% of Irish consumers will research a product or service online before proceeding to make a purchase, it is now almost essential to have an online presence for your business.

 

Minister for Communications Denis Naughten has advised that even companies that already have an online presence should avail of this training to build on their existing presence.

“I would encourage any small business employing 10 people or less to avail of the training to make sure they are using Facebook and Google properly and to be able to receive payments online.”

 

Indeed, in this digital age we would encourage all clients to ensure that their online presence is functional and up-to-date. Should you require any assistance or guidance on any financial or business matters, please do not hesitate to call us here at DCA Accountants.

 

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~ DCA PARTNERS, DECLAN DOLAN & EAMONN GARVEY

BOLDLY GOING WHERE NO FINANCE HAS GONE BEFORE

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A topic we touch on quite regularly is Irish Small and Medium Enterprises (SMEs). These are a continuing topic due to the fact that SMEs are fast becoming a backbone of Irish business and employment, with them accounting for over half of all employment in Ireland. Recently we have spoken about the trials and tribulations of gaining adequate financing as an SME in Ireland, and today we have some welcome news to share on that front. A UK finance firm called BMS which was set up in 2005 has recently launched a €30m debt fund targeting SMEs in Ireland. This firm will charge interest rates of between 12 and 15% to Irish SMEs.

BMS Finance Ireland is backed by the Ireland Strategic Investment Fund (ISIF) and will focus primarily on those SMEs we have spoken about previously, those who have been unsuccessful in gaining funding through the traditional means (in Ireland, these would be primarily the banks). Director of the firm, Shane Lanigan has said of the fund “You see a lot of alternative funders, crowd-funders for example in the market up to around €500,000 and then the banks will start playing when they’re looking for €5m plus, but €1-3m is the most difficult gap in the market for SMEs to finance.” Thus, BMS will seek to fill in this gap for the SME market, allowing more growth and opportunity in this vital sector.

The rates from BMS Finance Ireland start at more than double the highest average rate being offered to SMEs by banks, which will give these companies a greater starting point from which to expand. The fund will be available to all sectors apart from the property sector. BMS Finance Ireland has said that their primary focus will be on entrepreneurs and owner-managed businesses, having already begun financing by investing in two companies. The firm is also looking toward opening an office in Dublin in the coming months which will be a welcome influx of job opportunities in itself for the city.

Going forward BMS Finance Ireland will be looking to integrate into the Irish market and greatly increase their lending potential and the range of lending they can offer. Hopefully this state-backed lending initiative will be the beginning of a new era of success for Irish small and medium enterprises.

Should you require any guidance or assistance with your own business or financial matters, please do not hesitate to contact us here at DCA Accountants where we will be delighted to assist in any way we can.

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~ DCA PARTNERS, DECLAN DOLAN & EAMONN GARVEY

WHOSE CASH IS IT ANYWAY?

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In recent weeks, we have talked quite a lot about the current funding options available for Irish Small and Medium Enterprises (SMEs). As SMEs continue to become a large part of the Irish economy during the recovery, their funding has been an important topic to cover as it is important to ensure the survival and stability of these companies. As previously discussed, the banks remain the largest source of funding to Irish SMEs.

 

Recently, Revenue have warned SMEs about the possibility of additional tax charges on loans which may have been sold to so-called ‘vulture funds’. These vulture funds have long been a hot topic of contention when it comes to SMEs. It was recently discovered that the acquisition of distressed loan books can trigger a demand for withholding tax on interest paid on individual loans, for which the borrower is liable. Under Irish law, companies must deduct 20% tax on interest payments.

 

The problem for SMEs here is that as the banks remain their largest source of funding, this tax does not apply and as such these companies may be unaware of their tax liability should this loan be sold to a purchaser outside of the banks. If your SME loan was sold on by the bank, then you as the borrower may potentially be at risk for owing additional tax and interest along with penalties owed for time passed without payment. This issue becomes a larger and more costly one when it is considered that the issue may not be known for a number of years until finances are more deeply looked into.

 

Tax partner at MG Partners, Aisling Donohue has said that this issue has arisen due to a “combination of bad tax laws and unfairly worded contracts” and that this could cause major issues for SMEs looking to sell their business. “An adviser doing diligence could flag this as an issue and say the SME was exposed to possible interest and penalties and this would mean the company was worth a lot less.” Donohue also stresses the importance of remembering that this applies to companies and not to individuals to avoid further concern.

 

If you are concerned about this and the funding status of your own SME, we would suggest contacting Revenue directly for clarification or alternatively to ask Revenue to create a provision for paying interest gross to a non-banking entity. If you have any further concerns regarding this or any other business or financial issue, please don’t hesitate to get in touch with us here at DCA Accountants.

 

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~ DCA PARTNERS, DECLAN DOLAN & EAMONN GARVEY

YOU TALKING TO SME?

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There is no disputing the fact that the past couple of weeks have been one of uncertainty for our little island as confusion and lack of clarity reigned supreme following the general election as we were without government until decisions could be reached. Whilst it may have seemed that the uncertainty would continue on, decisions were eventually made and our new government came into being. Despite these changes coming into place so recently, promises and plans are already being made and put into place for some major changes which might be of benefit to you and your business.

Recently it has been suggested that there will be a massive surge towards tackling the country’s ongoing mortgage crisis with measures aimed at assisting existing homeowners and, one would hope additional measures to assist prospective homeowners. These measures would be of great benefit to workers and business owners alike who may be struggling with savings or payments.

With Small and Medium Enterprises (SMEs) beginning to form somewhat of a backbone to Irish business, accounting for just over half of all Irish businesses, it is no surprise that it has recently been reported that a newfound focus on these small businesses is said to be close to the top of the agenda for the new government. A document which formed the basis of negotiations between the Independent Alliance and Fine Gael is said to outline the dire need to make progress on the issue of credit availability for Irish SMEs.

It is reported that the Independent Alliance in conjunction with Fine Gael have signalled the need to make available €1billion in additional finance to assist Irish SMEs in initial set-up and expansion issues. Lack of competition in the banking sector in Ireland has resulted in our SMEs paying more for credit than elsewhere in Europe. This, in conjunction with the discrepancies between what large companies pay for credit and that which is paid by SMEs in Ireland, makes it increasingly difficult to not only get a small business off the ground, but to keep it running. We have spoken at length in the past about the issues associated with SMEs attempting to borrow from traditional banking lenders and also new non-traditional lenders, so this new push could be a step in the right direction for the future of business in Ireland.

It is said that the new government’s focus to tackle this issue will be on developing new alternative funding sources which will be open to SMEs from peer-to-peer lending to investment opportunities in order to reach their financing goal of €1billion. The hope is that this will stimulate competition in this sector which will in turn lead to the wider availability of funding. The draft document outlining these proposals is due to be published later in the week and should also detail a commitment to increasing the earned income tax credit from €550 to €1650 for the self-employed by 2018, another step in the right direction for small business owners in Ireland.

As always, whether you are a small or large business owner, or just starting out on your own should you require any financial or business advice please do not hesitate to contact us here at DCA Accountants where we will be happy to help.

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~ DCA PARTNERS, DECLAN DOLAN & EAMONN GARVEY

SHOW SME THE MONEY!

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The question of financing can often be the difference between taking action on setting up your own business, and deciding not to go ahead with it. Certainly in recent years, financing has become somewhat of a fraught term with cash flow being a major issue and less options being made available to Small and Medium Enterprises (SMEs). Banks remain the top choice for these companies to gain finance as only a small minority seek alternative options for financing their business. It has been reported that even after finding themselves declined for finance from the banks, many SME owners still do not seek out alternative funding options. With the financial climate in Ireland beginning to take a slight turn for the better in recent months, perhaps now would be a good time to begin looking beyond the banks when you want to begin or grow your business and are in need of the financial backing or financial boost to do so.

 

The Strategic Banking Corporation of Ireland has recently urged SMEs to look towards alternative funding options to the banks, as this may allow them to access funding more suited to their individual needs. With the Irish economy now making a valiant attempt to recover, there are a number of new lenders emerging which offers a great deal more choice to SMEs which previously would have had very few options after being declined by the major bank lenders. Due to a newly competitive market, these lenders can often offer quite competitive rates and have the financial confidence to accept what major banks may see as being a risky investment. Another positive aspect of the arrival of these new lenders to the market is that many have the ability to deliver funds far faster than major lenders.

 

Many SMEs may suffer from seemingly weak financial reports when compared to larger companies, or be in the midst of a restructuring plan, which may result in them being declined by bank lenders. Perhaps these new more widely available lenders could now make all the difference for these companies which will now have more options to choose from.

 

Invoice financing is one such way for SMEs to avail of funding through companies such as Clancy Cashflow Solutions who welcome businesses which have been declined by larger lenders and allow borrowers to release funds tied up by their debtors in order to immediately make use of funds. Whilst some lenders create an impossible situation for borrowers wherein they may not have access to enough cash to make it until the payment of the loan, this financing option allows for swifter access to funds, sometimes even within 24 hours.

 

Invoice financing works by raising an invoice to your customer which is then forwarded to the funder who will allow for the almost immediate release of a portion of the requested funds to allow your business to stay running smoothly.

 

Should you have any financial queries or issues that you require advice on, please don’t hesitate to contact us at DCA Accountants, where we will be happy to help in any way.

 

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~ DCA PARTNERS, DECLAN DOLAN & EAMONN GARVEY