Multiple state schemes aim to help business finances
From energy supports to the Covid-19 Loan Scheme, the government has set aside billions of euro in funding to assist Irish firms, writes Emily Styles
Just when the government was waving goodbye to costly Covid supports earlier this year, along came the war in Ukraine and the resulting spike in energy costs for business. Ministers addressed the issue in Budget 2023, with the announcement of the
Temporary Business Energy Support Scheme (TBESS),
with €1.25 billion in public funding set aside for subsidy payments.
The TBESS is being complemented by the €200m Ukraine Enterprise Crisis Scheme, which also has an energy strand.
The energy support scheme, which will be administered by Revenue, provides for a cash payment to qualifying businesses. It is intended that the scheme will operate in respect of electricity and natural gas costs relating to the period September 1 2022 to December 31 2022, and very likely out to February 28 2023 subject to EU approval. Whether the scheme is extended into March 2023 and beyond will likely depend on what happens to the wholesale price of gas over the coming months.
Claims may be made in respect of each calendar month within this period. The first claim period for which a claim can be made is September 2022, and it is expected that businesses will be able to make claims through the Revenue Online Service by the end of November.
The scheme operates by reference to bills for the metered supply of electricity and natural gas through accounts identified by Meter Point Reference Number (MPRN) or Gas Point Reference Number (GPRN). To be eligible to make a claim under the TBESS in respect of an electricity bill or a natural gas bill, a business must be able to demonstrate that the average unit price for electricity or
natural gas on the relevant bill has increased by 50% or more as compared to the average unit price of electricity or natural gas in a reference period. In broad terms, this is the average unit price in the month that is 12 months prior to the claim period to which the relevant bill relates. This 50% increase is known as the ‘energy costs threshold’.
A qualifying business is entitled to claim a Temporary Business Energy Payment (TBEP) amounting to 40% of its eligible cost, subject to a cap for each monthly claim period. A claim for a TBEP must be made within four months of the end of the claim period to which a particular electricity or natural gas bill relates. The TBEP is subject to a monthly cap, which applies on a per trade basis or a per profession basis. According to Revenue, in general the support available in respect of electricity and natural gas costs is subject to a monthly cap of €10,000.
However, where a business carries on its trade or profession from more than one location, and has multiple MPRNs in different locations, the cap may be increased by €10,000 per electricity account/MPRN, subject to an overall monthly cap of €30,000 per trade. The increased cap is available in relation to both electricity and natural gas costs relating to the trade or profession. An overall cap on the amount of support that a business can claim applies in line with requirements of the EU’s Temporary Crisis Framework.
The TCF permits aid of up to €500,000 to an undertaking, or €62,000 in the case of farmers, or €75,000 in the case of a business active in the fishing and aquaculture sectors. According to Revenue: “Where an undertaking is active in several sectors to which different maximum amounts apply, it is necessary to ensure by appropriate means, such as separation of accounts, that the relevant ceiling is respected for each of those activities and that the overall maximum amount of €500,000 is not exceeded per undertaking.”
To make a claim for a Temporary Business Energy Payment, the person carrying on a qualifying business must register for the scheme on ROS, provide certain information and make a declaration that they satisfy the conditions to make a claim. A number of other conditions must be satisfied, including that the person is eligible for a tax clearance certificate and has complied with their tax registration, payment and tax return filing obligations.
The scheme operates on a self-assessment basis. Revenue has advised that claimants should retain evidence supporting their basis for making a claim under the scheme, which may be requested by Revenue under future eligibility checks. Claimants of business energy supports will be identified in publications on the Revenue website.
UKRAINE ENTERPRISE CRISIS SCHEME
The Ukraine Enterprise Crisis Scheme unveiled in October offers two streams of funding to assist viable but vulnerable firms of all sizes in the manufacturing and internationally traded services sectors. The first stream will assist firms suffering liquidity problems as a result of Russia’s war on Ukraine, and the second stream will also help those impacted by severe rises in energy costs. Eligible companies do not have to be an Enterprise Ireland client to apply, though they have to demonstrate that they have an energy efficiency plan in place or are preparing a plan to reduce future energy consumption.
Enterprise minister Leo Varadkar commented: “Many businesses are very worried heading into the winter. At a time like this, you can rely on us to back business and protect jobs to ensure a strong economy. The Ukraine Enterprise Crisis Scheme will help businesses competing internationally and suffering the broader effects of the war in Ukraine as well as increasing energy costs. It will assist companies most exposed to the significant increases in energy costs largely driven by Russia’s brutal invasion of Ukraine and other negative effects of this crisis. This particular scheme will not be limited to agency client companies but will be limited to manufacturers and exporters.”
Stream 1 offers aid of up to €500,000 in grants, repayable advances, equity, and/or loans. Applicants will have to demonstrate the impact of the Ukraine war on their business including supply chain and input cost increases including energy. Aid will be granted to implement a Business Sustainment Plan.
Stream 2 of the scheme is for energy-intensive businesses where energy cost was at least 3% of turnover prior to the crisis. It will be a grant of up to €2m for costs incurred between February and December 2022. The quantity of units of gas and electricity used to calculate the eligible costs must not exceed 70% of consumption for the same period in 2021
For both streams, applicants must submit an energy efficiency plan either planned or underway and ratified by senior management of the company. The Ukraine Enterprise Crisis Scheme, which the government expects to cost taxpayers €200m, will be implemented through Enterprise Ireland, IDA and Údarás na Gaeltachta.
UKRAINE CREDIT GUARANTEE SCHEME Ukraine
One the way before the end of the year is the
Credit Guarantee Scheme to provide low-cost unsecured working capital for SMEs and primary producers to help them to spread the increased input costs and limit disruption to supply chains. Administered by the SBCI, loan funding of up to €1m will be made available, on a six-year term, with no collateral required for loans up to €250,000.
The Ukraine credit scheme is in addition to the new Growth and Sustainability Loan Scheme, which will make up to €500m in low-cost investment loans of up to 10 years available to SMEs, including farmers and fishers and small mid-caps, with no collateral required for loans up to €500,000. A minimum of 30% of the lending volume will be targeted towards environmental sustainability purposes.
COVID-19 LOAN SCHEME
The Covid-19 Loan Scheme (CLS) was introduced in July 2022 in response to the required closure of the Covid-19 Credit Guarantee Scheme (CCGS) at the end of June, due to EU rules. As of May 2022, the CCGS had helped 10,350 SMEs with access to finance of €730m.
The CLS is available to Covid-impacted eligible SMEs, including farmers and fishers, and small mid-caps. Loan amounts are €25,000 up to €1.5m, with terms of one to six years, and unsecured up to €500,000. Finance provided can be availed of to help with existing short-term credit. The CLS is delivered by the Strategic Banking Corporation of Ireland through participating lenders.
To avail of the CLS, a borrower has to show an adverse impact of a minimum 15% in turnover or profit due to the impact of the pandemic. Lenders participating in the scheme are separated into two cohorts. For the first, interest rates are variable but are capped at an initial maximum rate of 3.7% for loans less than €250,000 and 2.75% for loans of €250,000 and above. For loans from the remaining lenders, a minimum discount of 1% relative to their standard rates is required for participation.