Here's how SMEs reacted to Budget 2018 and the Brexit Loan Scheme
The decision to leave Corporation Tax at 12.5pc was welcomed
Representatives of small and medium enterprises (SMEs) welcomed a number of decisions in today's Budget but some questions have been raised about just how the much-heralded Brexit loan scheme will work.
Minister for Finance Paschal Donohue announced that €300 million has been allocated to a Brexit Loan Scheme for SMEs during his speech in the Dail today.
The scheme, which will be run by the Departments of Business, Enterprise and Innovation and Agriculture, Food and the Marine, is aimed at reducing the harm to business most exposed to the impact of Brexit.
The loans, which Minister Donohoe said would be available at "competitive rates" (later confirmed at circa 4pct) via the Strategic Banking Corporation of Ireland (SBCI), will see 40pc of the fund aimed at the food industry.
ISME, the representative body for SMEs, welcomed the Scheme's announcement, saying it would "support the export industry to expand beyond the UK market, providing some support to the potential impact of Brexit."
ISME CEO Neil McDonnell said: “The introduction of €300m Brexit Loan Scheme, is a recognition by government of the Brexit challenges faced by SMEs. We have lobbied consistently for mechanisms that would assist SMEs who have direct exposure to Brexit.”
However, Pat Sutton, Managing Partner O’KellySutton Chartered Accountants, Tax Advisors and Business Consultant, said that he would need to see how the fund would be administered and he pointed out that businesses losing money need more support and not further loans on their books.
"The devil will be in the detail," said Sutton. "The question is will the money trickle down to the companies who need it? And will small companies be able to get their hands on the money without too much red tape getting in the way?
"A lot of small companies have been hit hard and they are losing savage money. I think that perhaps tax refunds or grant schemes may have been better than a loan scheme.
Speaking about the new Scheme, An Tánaiste and Minister Business, Enterprise and Innovation Frances Fitzgerald said: “Businesses are telling me that access to working capital is a key issue for them and my Department’s research confirms this. The Brexit Loan Scheme will reduce the cost of borrowing and provide much needed headroom to viable businesses at this uncertain time.
"In addition, I have asked my officials to progress with the Department of Finance and the SBCI and EIB the development of a Longer-Term Loan Scheme, together with a new Business Advisory Hub service, which would focus on business development to allow enterprises to position them for a post-Brexit environment.”
Business lobbyists, including the British Irish Chamber which has been deeply focused on the impact on Brexit, gave a broad welcome to the Scheme.
Eoin O'Neill, president of the organisation, said easier access to loans would give small businesses much needed support.
"Greater funding for the state agencies will go some way towards supporting those businesses that are particularly exposed to Brexit," he said.
Joe Healy, president of the Irish Farmers' Association, said access to competitive loans for farmers is hugely important.
"It is important that this funding is available to farmers across all sectors for investment and working capital, and must include farmers in enterprises that are under particular pressure, including the tillage and mushroom sectors, due to poor price returns," he said.
ISME were happy that Ireland's 12.5pc Corporation Tax wasn't touched, citing the need to remain competitive, attractive and open to Foreign Direct Investment was more important than ever.
Other measures announced in the Budget, such as the extra funding for housing, would be welcome news for builders according to Sutton while it was also a good day for the tourism industry with the nine per cent VAT rate maintained.
- Read more: The 'cup of coffee Budget', a return to 'boom and bust' and 'fake news' - reaction to Budget 2018
ISME reserved their strongest criticism for Capital Gains Tax measures.
"An opportunity was missed to address the disparity between the UK and Ireland in CGT Entrepreneur’s relief," said ISME.
"The UK enjoys a ceiling of £15m, compared to our €1m. The CGT rate remains unaltered at 33pc."
Sutton was also highly critical of the gulf between the Irish rate and the UK rate.
"They had indicated that there would be a change," he said. "They could have at least doubled the Irish rate to €2m. Overall I think they did very little that was positive for business."
Other measures for the self employed, such as a €200 increase in their tax credit, were welcomed as a step towards parity with PAYE workers.
McDonnell said: “While more could have been done to improve our competitiveness and innovation, we welcome some of the measures today. The increase of €200 in the Earned Income Tax Credit to €1,150, it is step towards equity for the self-employed, but we will continue to fight for full parity between EITC and the PAYE Tax Credit.”