Brexit is back on the agenda for small businesses and start-ups of Ireland, despite the continued threat of the Covid pandemic. Research published yesterday from the Economic and Social Research Institute (ESRI), showed that small and medium-sized enterprises (SMEs) lost between 6 billion euros ($7.1 billion) and 10 billion euros from March to June with many companies using up their cash reserves.
Meanwhile, Ireland officially entered recession last week after the economy contracted a record 6.1% between April and June. Julie Sinnamon, the chief executive of Enterprise Ireland, the agency responsible for developing the country’s indigenous businesses and a regular early stage backer of tech start-ups, spoke to CNBC on the impact of coronavirus.
“The immediate impact on companies was liquidity, so a lack of funding,” she said. Enterprise Ireland established a number of funds and mechanisms to provide emergency capital to companies. It has approved 34.4 million euros of funding for Irish companies affected by the coronavirus so far. Much of that has been through the Sustaining Enterprise Fund, which provides liquidity of up to 800,000 euros, with up to 200,000 euros of that being non-repayable.
It hasn’t been without challenges. Some companies have complained of a slow process in getting applications submitted and approved during what are emergency times. In June, just five companies had been approved for the Sustaining Enterprise Fund. As of Sep. 11, there have been 53 companies approved. Enterprise Ireland said it aims to complete applications in 20 days.
“I think between now and the end of the year we will succeed in supporting and using the funding available,” Sinnamon told CNBC. “But this slow start in terms of companies applying is not any different than we would have expected, or would have seen in previous crises when you had similar supports available for companies.”
Sinnamon said Enterprise Ireland’s attention is now shifting to longer-term efforts. Covid-19 has seen the agency balancing the needs of companies facing an immediate risk of collapse and those that have been forced to pivot into new areas.
“For some of them it has required investing in innovation, changing their products. In some cases, it was really just retracting into their shell in the short term, but in others it was diversification,” she said.
At the start of 2020, Enterprise Ireland’s priorities were very different. Since 2016 the company’s top line messaging has been around Brexit preparedness, developing support funds and grants for those most exposed.
“We are really trying to reactivate the (Brexit) plans for companies who had parked them in the height of the Covid crisis to make sure that they’re continuing with their plans,” Sinnamon said.
It has been urging Irish companies to reduce their dependence on the U.K. for exports and to diversify into other markets. The U.K.’s Brexit transition period with the EU is set to end on Dec. 31 and there’s still a real chance that both sides will fail to agree a trade deal before that date.