The Small Firms Association (SFA ) has called for the establishment of a €600 million fund aimed at providing grant aid to the small to medium-sized enterprise (SME ) sector as more companies struggle with rising business costs.
The aid would only go to companies that have the proven capacity to grow but whose survival is threatened by excessive day-to-day business costs and currency exchange difficulties.
Also on the SFA’s latest wish list for government-led initiatives is a state guarantee scheme for bank loans to SMEs. The body is also calling on the Government to pay its own bills to small businesses within 10 days, in order to help companies with their cash flow.
Action should also be taken to tackle what the SFA calls the country’s "excessive cost base".
The SFA’s Spring 2009 Business Sentiment Survey, published yesterday, listed electricity, local authority and gas/oil costs as the top three business costs that have had the most significant effects on small businesses in the past year.
The survey has been developed to give the Government real time information on the experiences on the ground of small businesses, so that they can adopt their enterprise policies at the necessary speed that the new realities facing us dictate”, commented Patricia Callan, SFA Director. A total of 475 companies employing over 8,340 people responded to the survey.
Labour costs were listed as the seventh highest price increase in the past 12 months, with rent and lease costs listed 12th.
Commenting on the findings, Ms Callan said that these results clearly indicate the deteriorating market-conditions small businesses are facing, and the urgent need for the Government to put in place an appropriate response to ensure that small businesses can stabilise and position themselves for growth when the global economic upturn takes place. In particular, the SFA is calling for:
1. Establish an Operational Programme Fund for Small Businesses of €600million to grant aid businesses which have the capacity to grow in the future, but whose current viability is being threatened by currency exchange difficulties and the costs of doing business. Such supports should be tied to job maintenance, the development of management capability in small businesses and innovation measures.
2. Government-backed Loan Guarantee Scheme for small businesses which would make the banking sector less risk averse to lending to established small businesses, which will allow them to stay in business and their employees to stay in jobs.
3. Government to pay its own bills to small businesses within 10 days, which will assist small businesses with their cash-flow.
4. Reduction of employers’ PRSI – this will incentivise companies to keep people in jobs where there is work for them to do, rather than being forced to let them go, because it is the only cost within their control.
5. Action to tackle our excessive cost-base: it is no surprise that the top three business cost increases over the past year come from the government administered sector – action must be taken to ensure the Energy Regulator does not continue its bizarre agenda of keeping prices high to attract in competitors; any price decreases that are possible must be immediately passed on to the small business sector. Increases in local authority charges in 2009 should be reversed, as we will actually experience deflation this year, and thus this is completely unjustifiable.
“The reality is that Irish small businesses can no longer rely on domestic demand and surplus cash in the economy. They must now operate in a globalised market-place, which brings with it tougher competition operating from lower cost-base economies. To be successful in this new world order, Irish small businesses will have to bring their own cost base back under control,” Ms Callan concluded.