Enterprise Ireland (EI) has allocated just €20m of a special EU-approved Covid rescue fund to troubled Irish companies. But agency chief executive Julie Sinnamon told the Sunday Independent that the entire Sustaining Enterprise Fund of €180m would be allocated before it runs out at the end of the year.
The agency has identified 300 client companies significantly affected by both Covid and Brexit. A further 5,000 firms, many of them not EI clients, have also made contact with the agency for financial planning advice, she said.
Industry bodies have called for emergency funds to be pumped more quickly into troubled companies hit by the pandemic in order to close the widening liquidity gaps that are threatening their future. But Sinnamon insisted that the process takes time because EI must work with shareholders and banks, as well as the companies themselves.
"It isn't just about the State supporting these companies," she said. "It really is a tripartite approach that is needed to put together sustainable plans and to get everybody to play their part to fund these companies through to the recovery phase. We're very active in that space with companies across all sectors and that will determine how many of those companies with significant liquidity issues at present can be sustained."
The EU has approved a temporary framework for €180m to be used in this way in 2020 and this fund is being administered by EI. It has approved €20m to date, but the pace of approvals would now speed up, she said.
"The €180m has to be approved by year end. I still think that will be the case," said Sinnamon. "The constraint for me is not the budget. It's getting companies to put together their plan along with the other players involved - the banks and shareholders. That's the most important engagement over the next number of weeks to try to get everybody to play their part to sustain these companies going forward.
"It isn't just about EI writing a cheque. It's about ensuring there is a sustainable business plan that is viable in the medium term," she said.
"From when we get an application in, to when the funding is in the company's bank account is a 20-day turnaround time. That actually is, in my view, reasonable," she said.
A further €40m has been allocated this year under EI's standard innovation, diversification and competitiveness supports, and Sinnamon said this would likely rise to about €120m by the end of the year.
It was crucial that the challenges associated with Brexit did not get obscured by the pandemic, she said, adding that she was encouraged by the diversification of export markets that Irish companies had achieved since the UK's referendum. Exports to the UK now made up 31pc of the overall figure, down from about 45pc 15 years ago. In 2019, eurozone exports had grown 15pc and the US was up 16pc.
"So companies came into this year, a really challenging year, in a stronger position than they might otherwise have done. There is lots of uncertainty with Covid and with Brexit. But I think the results in regions like the eurozone will give confidence to companies that have gone there."
But "the mood music" suggested Irish firms needed to prepare for a hard Brexit, she said.
"An easy transition looks less likely. 2019 was a really great year for Irish enterprise but the challenges between now and the end of 2020 in terms of Brexit coming down the track on top of liquidity and market issues as a result of Covid is going to be very challenging. Covid had such a dramatic effect in the short term that people have almost forgotten that Brexit is coming. I think you can only absorb so much at one time."
Sinnamon has delayed her departure from the top job at EI due to the Covid-19 crisis and will not now depart the role until some time next year, she told the Sunday Independent.
In February, before Covid struck, she announced that she was to leave and a process was to be launched at that point to appoint a successor.
"I have agreed in the last week or two with the board that the process will be reactivated over the coming weeks. It pushes out whatever the departure date is and I'll be here into 2021 but that really depends on how long the process takes.
"If the issue wasn't as substantial as Covid it probably would have required a lot of thought. But Covid came along out of the blue and the impact was massive and immediate so it was actually a relatively easy decision to make. I couldn't have countenanced saying to the team 'it's over to you guys, I'm off'. It has been a really intense four or five months."