CORONAVIRUS – A PRACTICAL GUIDE FOR SMES
Please see our updated guide issued on 31st March 2020: Coronavirus Survival Guide for Business.
Protecting our families may be the priority but business owners also need to consider the impact of Coronavirus on SMEs. Many companies, particularly in the tourism, hospitality and retail sectors will suffer an adverse impact from the Covid-19 pandemic.
Over the weekend, we saw pubs and bars around Ireland close and there are now calls from the Restaurant Association of Ireland for restaurants to follow suit.
Most small to medium sized businesses are likely to experience cash flow difficulties over the coming weeks. That is, unless they have large reserves built up. Orpen Franks Solicitors LLP wants to offer practical advice to business owners at this critical time. So, we have prepared the following guide to deal with some of the issues facing businesses right now:
Tax, VAT & Coronavirus
The Revenue Commissioners have put a number of measures in place to assist businesses experiencing cash flow difficulties. They have confirmed that they will not apply interest on late VAT returns for January and February. This applies to small and medium sized companies experiencing cash flow difficulties. In an additional move, it has suspended interest on late payments of employers PAYE liabilities during February and March. However, returns should still be made on time.
Revenue has also confirmed that tax clearance status will remain in force. Debt enforcement activity has been suspended until further notice.
Find out more here about the Revenue Commissioners measures for SMEs in difficulty.
Access to Finance, Banks & Coronavirus
The three main banks say they will support their business customers through this crisis. AIB, Bank of Ireland and Ulster Bank have all confirmed this to the Minster for Business, Enterprise and Innovation.
We recommend that you conduct an assessment of your cash needs for the coming weeks. Then contact your bank to talk about financing.
An alternative is the Government’s SME Credit Guarantee Scheme. It offers loans of €10,000 up to €1 million which would not be avail of credit under normal lending terms. Find out more here about the scheme.
The Strategic Banking Corporation of Ireland (SBCI) is finalising terms and conditions for the SBCI Covid 19 Working Capital Scheme. They are also still working on the eligibility application process but the scheme should be available in the coming weeks.
Leases, Landlords & Coronavirus
It is easy to foresee that there may be defaults in rental payments over the coming weeks. If you are in this situation, the best advice is to speak to your landlord in advance, Then, you can try to agree a workable solution. It is expected that a reasonable level of forbearance will be shown.
Employees and Coronavirus
At a minimum, you can expect disruption of normal staffing levels. So, you could create a business continuity plan to accommodate the absence of key employees. Staff could be absent due to a positive diagnosis of Covid 19 or self-isolation due to exposure to it. Where possible, employees should be encouraged to work remotely until 29th March. After that, the measures put in place by the Government will be reassessed.
At the next level, you may need to lay off employees temporarily, without pay, or reduce working hours. This could be due to a reduction in business or a direction from the Government to close your business. If this is necessary, the employees will be entitled to Jobseeker Support or Short-time Work Support. A new Covid-19 Pandemic Unemployment Payment will also be available for a period of 6 weeks at a flat rate of €203 per week.
If you need to permanently reduce staff, due to a downturn in business activity, the usual redundancy rules will apply. In this case, you should seek professional advice before taking any steps to lay off employees.
Suppliers & Coronavirus
In the event you are unable to pay suppliers, you should contact them as early as possible. The commercial reality is that many suppliers may extend credit terms in order to maintain the business relationship. Be mindful however that your suppliers are also likely to be answerable to landlords, banks etc.
Please contact us if you need further advice on helping your business through the Coronavirus crisis. You can call Laura Bolger on 00353 1 637 6200 or email Laura.Bolger@orpenfranks.ie