Every small business in Ireland should get a €15,000 flat payment to cope with the extra costs imposed by the Covid-19 crisis and the Government should guarantee low-cost "bounce back" loans, Ibec says.
The measures should be among supports for small and medium-sized enterprises (SMEs) included in the proposed 'July stimulus' outlined in the programme for government.
Employers' group Ibec's chief economist, Gerard Brady, says the July package should feature a "dramatic intervention" for small businesses.
"The SME sector has been the worst impacted by the enforced lockdown of business and consumers due to the Covid-19 pandemic," he said. "Unless there is a dramatic intervention, significant numbers of businesses will fail in 2020."
Ibec research suggests seven in 10 companies will use up cash reserves before demand returns to normal, he said.
"This 'liquidity gap' will need to be bridged by external funding in order for many of these companies to survive," added Mr Brady. "The July stimulus provides an opportunity to deliver emergency supports to the SME sector that can provide critical bridging finance while SMEs try to trade their way through and adapt to the new normal."
Ibec said the three urgent policy area recommendations for SMEs in the July stimulus are:
:: A restart grant, including a flat payment of €15,000 per company to match schemes in Germany and the UK. It also wants a clause which links aid to previously paid commercial rates scrapped.
:: A new and improved 'bounce-back' credit guarantees on loans with 100pc guarantees, no portfolio limit and an interest rate holiday of 12 months to be followed by interest rates below the eurozone average.
:: A fund to write down debts under the Revenue Commissioners tax warehousing scheme when they threaten business viability, an extended commercial rates waiver and a binding mandatory arbitration model for disputes over commercial leases.
The idea of a July stimulus package is included in the proposed programme for government as a chance to introduce economic support measures in advance of the full October Budget.
Finance Minister Paschal Donohoe, who is tipped to keep the same role in the new cabinet, has said the July plan will be targeted at sectors where there is an urgent need before October for supports including areas such as transport and tourism, retail and hospitality.
The July package will also outline the future of the Temporary Wage Subsidy Scheme, but the programme for government has not given any indication how big a package of measures will be announced next month or how quickly the funds will start to flow.
A series of grants and loans for businesses have been announced since the start of Covid-19 crisis, but the uptake or approval has been relatively slow.
A report in yesterday's Irish Independent found just five companies have so far been approved for emergency cash from the Government's €180m Sustaining Enterprise Fund.
The fund, established in April, offers repayable support or equity of up to €800,000.