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Fund will deliver cash aid for small and medium enterprises until recovery

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'Securing a quick injection of capital can support the business through the next three to six months as it adjusts to the "new normal" or raises further cash.' Stock image

'Securing a quick injection of capital can support the business through the next three to six months as it adjusts to the "new normal" or raises further cash.' Stock image

'Securing a quick injection of capital can support the business through the next three to six months as it adjusts to the "new normal" or raises further cash.' Stock image

Cash flow is the lifeblood of any business; even profitable businesses can fail without it.

Right now, many companies have seen it slow significantly and even dry up, leaving them in an unsustainable position.

Enterprise Ireland's liquidity and medium-term financial supports can help and are being delivered under the 'Sustaining Enterprise' fund. Support of up to €800,000 can be provided to companies, targeting them at their different stages of development and growth.

For companies operating on a smaller scale, and as part of the Sustaining Enterprise Fund, Enterprise Ireland is administering support of up to €25,000 or €50,000, depending on the size of the business. This is a short-term working capital injection designed for smaller companies, which aims to encourage continuity through the crisis and allow the company to return to growth.

Smaller companies eligible for the €25,000-€50,000 scheme are also eligible to apply for the larger €800,000 one. All the supports are repayable in five years, but no repayments are required until year four.

It is open to manufacturing businesses as well as to service firms that face international competition either in the home market or overseas and you don't have to be an exporter, or even an Enterprise Ireland client, to avail of it.

Eligible businesses must employ at least 10 employees and have a turnover of less than €5m and show - or project - a fall in revenues or profit of at least 15pc as a result of Covid-19. Unfortunately, such businesses abound.

Applying for a short-term working capital advance of up to €50,000 from the Sustaining Enterprise Fund is a straightforward online process with a short turnaround time.

In many cases, this rapidly administered infusion of a small amount of liquidity will be sufficient to help businesses add an extra level of headroom to their cash position or to lever additional short-term funding from their bank. For other companies, it will provide the breathing space they need to source additional funds to address their medium-term requirements.

Happily, not all companies face difficulty. Some have done well, despite and because of the crisis. What unites all businesses right now, however, is the need for sound financial planning.

Managing cash will be of primary importance over the next 12 to 18 months and critically important over the next three to six months.

We are in a recession unlike any other we have seen before. However, like in all recessions, many companies face the double whammy of falling orders together with slower payments and increasing bad debts. Many face the challenge of trying to increase pricing to cover additional costs incurred as a result of Covid-19 or having to absorb them.

Very many have been experiencing forbearance in relation to overheads such as rents and rates. Those items will have to be paid, sooner rather than later, leaving businesses further strapped for cash. Many suppliers have been giving credit, but that too can only go so far.

Enterprise Ireland's Covid-19 Business Financial Planning Grant can help. It is a 100pc grant-aided support worth up to €5,000 to be spent on an approved financial consultant. He or she will work with the business to develop a robust financial plan to help it secure its position in the short to medium term.

Getting a clear view of your capital requirements is vital, especially where businesses temporarily ceased trading during the lockdown and now face uncertainty about the level of future orders. Making an honest assessment of the possible worst-case scenario is essential and an external advisor can help you sense-check your assumptions.

In the here and now, one of the biggest challenges facing businesses is the fluidity of the current situation. It is only in the weeks ahead that many will get a proper sense of the level of demand for their goods and services.

Securing a quick injection of capital can support the business through the next three to six months as it adjusts to the "new normal" or raises further cash.

In the face of such a potential cash crunch, for many small businesses having up to €50,000 from the Sustaining Enterprise Fund will be enough of a cushion to get them over the coming hump and back to recovery.

Donald Black is the manager of Enterprise Ireland's Core Client Unit

Sunday Indo Business