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Republic of Ireland government financial support for business in response to COVID-19

26 March 2020

Headlines

The Irish Government has set out a package of measures to support public services, people and businesses through the period of disruption caused by COVID-19.

Measures include the following:

  • A credit guarantee scheme supporting loans of up to €1 million
  • A loan scheme for micro businesses supporting loans of up to €50,000
  • €200 million SBCI Covid-19 Working Capital Scheme (WCS)
  • National COVID-19 Income Support Scheme
  • COVID-19 Pandemic Unemployment Payment
  • Short Time Work Support
  • Revenue Tax Support

Measures

Set out below are key details of the various support measures being put in place.

What is it?

  • The scheme supports loans of up to €1 million for periods of up to 7 years.  The scheme will be provided through AIB, Bank of Ireland and Ulster Bank.
  • Key features:
    • facilities between €10,000 up to €1 million
    • up to 7 years
    • term loans, demand loans and performance bonds
  • The Irish Government will provide lenders with a guarantee of 80% of each loan.  All credit decisions will be made by the participating lenders.
  • The interest-rate will be the relevant bank's SME lending rates.  In addition, the borrower pays a premium which covers the cost of providing the guarantee (can vary, but currently 0.5%), payable quarterly or annually.  The business remains liable for repayments of the capital.
  • There is currently no guidance on whether the loans will be secured or unsecured.
  • Refinancing of existing debt is excluded.

Eligibility

  • To be eligible for a facility under the scheme, a borrower must:
    • be a viable micro, small or medium sized enterprise
    • have fewer than 250 (or in the case of a small mid-cap company, 500) employees
    • have annual turnover of no more than €50 million (and have €43 million or less on its balance sheet)
    • be independent and autonomous (i.e. not part of a wider group of companies)
    • have less than 25% of its capital held by public bodies
    • be established and operating in the Republic of Ireland.
  • The following entities are not eligible:
    • businesses involved in primary agriculture, horticulture or fisheries
    • businesses that are in financial difficulty or subject to insolvency proceedings (excluding circumstances caused by COVID-19)
    • businesses that have in the last 5 years entered into an arrangement with creditor
    • businesses that have been convicted of offences concerning professional misconduct, fraud, corruption etc 

How can you apply?

  • The scheme is available now.
  • Businesses should approach one of the three nominated banks and go through their standard loan application process.

What is it?

  • Microenterprises can access COVID-19 loans of up to €50,000 from MicroFinance Ireland.
  • This is an initiative to support microenterprises which may be impacted by COVID-19.
  • Loans may be used for working capital and required business changes resulting from COVID-19.
  • Loan terms up to 3 years.
  • 6 months interest free and repayment free.
  • Interest rate: 6.8% if submitted through Local Enterprise Office or 7.8% if a business applies directly to MicroFinance Ireland.
  • No fees or prepayment penalties.

Eligibility

  • To be eligible for a facility under the scheme, a borrower must:
    • be a sole trader, partnership or limited company
    • have fewer than 10 full time employees
    • have less than €2 million annual turnover
    • have a balance sheet with net worth/capital account/equity that does not exceed €2 million
    • be experiencing a COVID-19 negative impact on their business of at least 15% of actual or projected turnover or profit

How can you apply?

  • Businesses should apply through the Local Enterprise Office or directly to MicroFinance Ireland.
  • The application requires a declaration that the business meets the eligibility criteria and that it is having difficulty in accessing finance from banks and/or other commercial lenders.
  • A business plan dealing with the COVID-19 impact is required, together with a cashflow forecast, 6 months bank statements and a Central Credit Register Report.
  • If applying for a loan exceeding €25,000, a list of aged debtors and creditors and preferential creditors will be required.

What is it?

  • The product will be provided through the Strategic Banking Corporation of Ireland through AIB, Bank of Ireland and Ulster Bank
  • Loan amounts of between €25,000 to €1.5million per eligible enterprise with a maximum interest rate of 4%. The loan amount and term will depend on the purpose of the loan.
  • The term of a loan will be between 1 and 3 years and loans will be unsecured up to €500,000.
  • Loans can be used for future working capital requirements or to fund innovation, change or adaptation of the business to mitigate the impact of Covid-19.
  • Loans cannot be used to refinance businesses in financial difficulties or to refinance existing debt (e.g. term loans/leases/hire purchase etc)

Eligibility

  • To be eligible for a loan under the WCS a borrower must:
    • be established and operating in the Republic of Ireland
    • be an SME with fewer than 250 employees and have a turnover of €50 million or less (or €43 million or less on their balance sheet)
    • be independent and autonomous i.e. are not part of a wider group of businesses
    • have less than 25% of their capital held by public bodies
  • In addition to the criteria above, a business must meet one of the following Innovation Criteria. Meeting the criteria is subject to evidence by way of business plans or where relevant, certification by an accountant practicing in the Republic of Ireland:
  1. at least 80% of the scheme loan will be spent on research and innovation activities associated with the business’s response to the COVID-19 challenge with the remainder on costs necessary to enable such activities.
  2. the business intends 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.
  3. the business 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.
  4. the business is 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.
  5. the business is 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 the application
    b. at least 10% per year of total operating costs in the three years preceding the application
  6. the business has been awarded a Research and Development or Innovation prize by an EU Institution or EU Body over the last 24 months.
  7. the business has 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 confirms that the loan is not covering the same expense.
  8. the business is an early stage SME and has received an investment over the last 24 months from a venture capital investor or business angel.
  9. the business intends 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
  10. the business is 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.
  11. the business has been 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 start-up) without any financial history, according to current financial statements.
  • SMEs or Mid-Caps not eligible to apply are:
    • agriculture and aquaculture sector businesses
    • those already in financial difficulty (not as a result of Covid-19 cashflow issues), being wound up or subject to administration court
    • where it has entered into an arrangement with creditors to avoid being wound up/administration in the last 5 years
    • those with previous convictions for professional misconduct by judgement, fraud, corruption, involvement in a criminal organisation, money laundering or any other illegal activity detrimental to the EU’s financial interest.
  • The Scheme Loan is subject to the state aid de minimis threshold of €200,000 per undertaking in any three year fiscal period (being the current year and the previous 2). More details on the state aid matrix can be found here.

How can you apply?

  • The WCS opened on 23 March 2020 and will be open until 23 March 2021, or until the WCS has been fully subscribed.
  • Firstly, the SME/Mid-Cap must satisfy the eligibility criteria by applying to the SBCI by completing the application form here.
  • Then, if the business is eligible, they will receive a letter from the SBCI which they then present to one of the nominated banks
  • Loans under the WCS will be subject to credit approval by the above banks.

What is it?

  • An eligible employer will be supported up to 70% of an employee’s take-home income up to a maximum weekly tax-free payment of €410 (which would be 70% of take-home weekly income of €38,000 per annum.
  • The scheme will support on incomes up to €76,000 or twice average earnings. It will be capped at €350 for incomes between €38,000 and €76,000.
  • The employer is expected to make best efforts to maintain as close to 100% of normal income as possible for the subsidised period.
  • It is replacing the COVID-19 Refund Scheme.

Eligibility

  • Employers must self-declare to Revenue that they have experienced significant economic disruption due to COVID-19.
  • The scheme is confined to employees who were on the employer’s payroll as at 29 February 2020, and for whom a payroll submission has already been paid in the period from 1 February 2020 to 15 March 2020.
  • Employers must:
    • be able to demonstrate, to the satisfaction of Revenue, a minimum of 25% decline in turnover
    • be unable to pay normal wages and outgoings fully
    • retain their employees on the payroll.

How can you apply?

  • An employer already registered with Revenue for the purposes of the Employer COVID-19 Refund Scheme, is not required to take any further action.
  • Employers wishing to register for the scheme can apply to Revenue by carrying out the following steps:
    • Log on to ROS myEnquiries and select the category “Covid-19: Temporary Wage Subsidy”
    • Read the Self-Declaration and Submit
    • Ensure bank details are correct
    • The employer runs the payroll scheme as normal, entering the following details for each relevant employee:
    • PRSI Class set to J9
    • A non-taxable amount equal to the employee’s net take home pay or 410 whichever is the lesser
    • If an employer is not making any payment to the employee, they should include a pay amount of €0.01 in Gross Pay
    • If an employer is making additional wage payments to affected employees, they should include this amount in the Gross Pay
    • Do not include the Temporary Wage Subsidy in Gross Pay
    • You must include pay frequency and period number.

What is it?

  • A new social welfare payment of €350 a week for employees and self-employed people due to the COVID-19 Pandemic, to last 12 weeks 
  • Started from 23 March 2020 and the application window remains open for the duration of the scheme.

Eligibility

  • You must:
    • Be aged between 18 and 66
    • Live in the ROI
    • Have lost your job due to the pandemic
    • Stopped trading as self-employed due to the pandemic.

How can you apply?

  • You can apply for the payment online here or post to PO Box 12896, Dublin 1.
  • You need a MyGovld account, personal details and bank details.

What is it?

  • A form of Jobseeker’s Benefit and is an income support payment if you have been temporarily placed on a shorter working week.
  • The payment is made in respect of your regular salary for the days that you are no longer working.
  • Paid for a maximum of 234 days and is dependent on the number of social contributions an individual has made.

Eligibility

  • To qualify for Short Time Work Support, you must be:
    • temporarily working a standard reduced weekly work pattern
    • working 3 days or less per week having previously worked full-time
    • be under 66 years of age
    • be capable of work and be available for full-time work
    • have enough paid or credited social insurance (PRSI) contributions at class A, H, S or P.

How can you apply

  • Apply though MyWelfare.ie here.
  • Employees can also apply at their local Intreo Centre or Social Welfare Branch Office.
  • Applications should be made as soon as days have been reduced or some payment could be lost.

What is it?

  • On an on-going basis, Revenue is engaging with businesses experiencing temporary cash flow or trading difficulties that affect the timely payment of tax
  • Revenue has also posted advice for businesses experiencing tax difficulties here.

Eligibility

  • Any business experiencing short-term difficulties due to COVID-19.

How can you apply

  • Get in touch with the Revenue directly.

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The content on this page is provided for the purposes of general interest and information. It contains only brief summaries of aspects of the subject matter and does not provide comprehensive statements of the law. It does not constitute legal advice and does not provide a substitute for it.

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