The Sustaining Enterprise Fund (SEF), administered by Enterprise Ireland, is the most generous SME support package we have ever seen. But the train is leaving the station, so if you haven’t already made an application you really have no time to lose!
Part of the Irish government’s multi-billion-euro response to the pandemic, this fund of €180 million is aimed at driving liquidity in manufacturing and internationally traded companies that suffered a reduction in turnover or profits and/or an increase in costs because of COVID-19.
This scheme is nearing its closing date of 15th December 2020 and has seen significant demand in recent months. The reason I have been recommending it to many of our clients is that qualifying businesses will be able to borrow up to €800,000, and potentially not repay any of it. Here is what you need to know.
What type of company can apply for the SEF?
The Sustaining Enterprise Fund is for businesses in the manufacturing or internationally traded services sectors that employ more than 10 people. Companies must be able to show a fall (or expected fall) in turnover of at least 15%, or significantly increased costs, as a direct result of COVID-19.
Companies that do not qualify for SEF are those active in the primary agricultural, fishery, or aquaculture sectors, businesses operating in the coal and steel sector, or any that were covered by specific rules for financial services. The scheme is also not open to larger companies – over 50 employees and with annual turnovers in excess of €10 million.
What can the Sustaining Enterprise Fund be used for?
The purpose of the scheme is straightforward enough in that it should ensure that the company can accelerate its recovery from the impact of the pandemic. The funds can be used to stabilise cash flow, adapt operations, and innovate for new customer needs.
What and how much funding can a company access?
You can access between €100,000 and €800,000 for a five-year period with no repayments due for the first three years. There is no administration fee for the first six months, after which there is a 4% fee per annum (on the repayable element).
Because you can transfer what you owe into equity or a convertible loan note, this effectively means that none of the money will be repaid.
The funding provided is made up of a combination of repayable and non-repayable support – repayable advances, grant aid, equity, and loan note. Technically, up to 50% of the funding can be non-repayable, with maximum non-repayable support of €200,000. However, because you can transfer what you owe into equity or a convertible loan note, this effectively means that none of the money will be repaid.
In terms of equity, the instrument used is primarily Cumulative Redeemable Preference Shares (CRPs). Cumulative Convertible Redeemable Preference Shares (CCRPs) and ordinary equity may be used where Enterprise Ireland seeks to match the terms of other investors.
What funding is available for smaller companies?
If you have more than 10 employees but your revenues are lower, you may be able to access the Sustaining Enterprise Fund for Small Enterprise. This sister fund provides between €25,000 and €50,000 in short-term working capital for smaller companies looking to support business continuity and strengthen their ability to return to growth.
The structure of this fund is just like the main Sustaining Enterprise Fund and funding is based on the following thresholds:
- If your annual turnover in your most recent financial statements was under €1.5 million, you can apply for up to €25,000 in funding.
- If your annual turnover in your most recent financial statements was over €1.5 million but less than €5 million, you can apply for up to €50,000 in funding.
What else is involved when applying for SEF?
To access the fund, you will need to develop a Sustaining Enterprise Project Plan. This will outline how you are going to use the money to stabilise the business and return to viability. You can use the Covid-19 Business Financial Planning Grant to help you create your Sustaining Enterprise Project Plan. It is worth up to €5,000 to cover the fees of an approved external consultant (Beyond Accounting is one of those approved consultants).
I am a huge advocate of business planning, so you should apply for the Business Planning Grant even if you are still undecided on applying for the SEF. Planning will help you set goals and develop a realistic roadmap for achieving them. Working with an external expert to develop a robust business plan for your next 12, 24, and 36 months is incredibly valuable, whether your goal is to raise capital, access supports, motivate your teams, grow sustainably, or simply better understand your strengths and weaknesses. The grant is 100% funded, so there is no investment needed on your part.
How to apply for Sustaining Enterprise Fund
Application forms are available from Enterprise Ireland’s Business Response Unit at email@example.com or 01 727 2088. All completed applications should be returned via email to GA-BSF@enterprise-ireland.com.
After a slow start, the Sustaining Enterprise Fund has seen a large volume of applications. The deadline of 15th December is still in place but given how popular this scheme has become, it’s possible that a second phase will be announced or that the deadline will be extended. I recommend, however, that you do not wait to start the application process as nothing is certain these days!