Whether we realise it or not, most businesses have been affected by the Russian invasion of Ukraine. Soaring energy prices were the most obvious consequence, but other knock-on effects of this aggression have been wide-ranging and include logistics problems, increased cost of materials, and a shortage of staff.
The EU has brought in a concerted response to the crisis, which includes releasing funds to member countries, under the Temporary Crisis Framework. The Irish government’s response scheme came into effect in October 2022, with around €200 million in funds to distribute to tens of thousands of businesses, supporting them primarily with the energy crisis. This scheme has been expanded and extended since.
Companies impacted by the Ukraine crisis should research what financial supports are available to them. Talk to agencies such as the IDA and Enterprise Ireland, talk to your business advisors, talk to your accountant. If you are feeling the effects of the crisis, there will be supports out there that can help. Below are some of the most relevant right now, most of which fall under the government’s response scheme.
Ukraine Credit Guarantee Scheme from SBCI
We’ve talked about the excellent financing opportunities from the Strategic Banking Corporation of Ireland (SBCI) before. The Ukraine Credit Guarantee Scheme offers low-cost finance to fund working capital or investment if your company has been impacted by the war in Ukraine.
Qualifying companies (SMEs and Small Mid-Caps) can borrow between €10,000 and €1 million in the form of term loan facilities, working capital, asset finance, and overdrafts. The amount a company can borrow is defined in the EU’s Temporary Crisis Framework, but a rule of thumb is 15% of your recent average annual turnover or 50% of your recent energy costs.
Repayment can be over three months to six years. Interest rates will vary depending on the loan and the lender but are lower than standard rates (our research suggests they may be around 3.9% – 4.9%).
If the business is an SME, you must have fewer than 250 employees and an annual turnover below €50 million (or an annual balance sheet below €43 million). Small Mid-Caps are defined as an enterprise that is not an SME but has fewer than 500 employees.
Eligibility for the scheme is based on these main criteria:
- Your costs have increased by a minimum of 10% on 2020 costs as a direct result of the conflict in Ukraine.
- You require funding for working capital (including liquidity) or investment. There are some excluded activities, such as purchasing shares or agricultural land.
- You are not refinancing an existing loan.
Typically, loans under €250,000 will be unsecured and the scheme will run up to 31st December 2024 or until it is fully subscribed. These schemes have sometimes been extended in the past, but there is no guarantee of this.
Full details of the scheme are available on the SBCI website.
Enterprise Ireland Ukraine Enterprise Crisis Scheme
Enterprise Ireland is the main agency charged with distributing financial supports in this context. Their Ukraine Enterprise Crisis Scheme has two streams to help businesses experiencing difficulties as a result of the war.
Stream 1 – Liquidity needs
Stream 1 is a liquidity measure to help viable manufacturing and internationally traded services companies experiencing trading difficulties to access funding up to €2 million. 50% of this funding is provided on a non-repayable basis, subject to a ceiling of €500,000. The minimum aid award of €20,000 does not have a repayable advance associated with it and is in the form of a grant.
To qualify, companies must demonstrate a 15% reduction in profitability (EBITDA) between 2021 and this year, as a direct or indirect result of the Ukraine crisis. Part of the application process involves submitting a Business Sustainment Project Plan (see below) that details the EBITDA reduction that can be attributed to the war in Ukraine, supported by accounting documents.
There are various exclusions and eligibility criteria. A full breakdown of this measure and links to enquire about it or request an application pack are available on the Enterprise Ireland website.
Stream 2 – Energy support
Stream 2 is a support for eligible “energy intensive” businesses that are experiencing severe increases in energy costs in 2022. Energy intensive businesses are businesses where at least 3% of turnover in 2021 was expended on energy costs, or 6% in 2022/2023.
In this case, companies must demonstrate a 15% reduction in profitability (EBITDA) as a direct result of increases in energy input prices (and not from other supply chain or inflationary issues). Unit energy costs must also have increased at least 1.5 times in 2022/2023, compared to 2021. Part of the application process involves submitting an Energy Efficiency Plan setting out actions that the business has taken/will take to achieve a greater level of energy efficiency. This plan must be ratified by senior management at the company.
There are various exclusions and eligibility criteria. A full breakdown of this measure and links to enquire about it or request an application pack are available on the Enterprise Ireland website.
Enterprise Ireland Crisis Response Business Financial Planning Grant
This grant offers up to €5,000 (100% of expenditure) for engaging with an external consultant (from EI’s directory of approved providers) to analyse a company’s financial health and put in place plans to improve it. The purpose of this grant is to encourage businesses to be proactive in detailed financial planning, specially where that can identify funding needs and potential sources of funding.
The plan should help you to:
- Understand the impact on working capital from the war in Ukraine, increases in input and energy costs, currency fluctuations, and supply chain disruptions.
- Understand any immediate liquidity issues.
- Create a financial plan to secure external finance.
- Develop a framework for managing the business finances.
This support is for Enterprise Ireland and Údarás na Gaeltachta clients, excluding HPSU clients employing fewer than 5 full-time employees at the date of application, that have not received an equity investment from Enterprise Ireland.
Part of the output of this engagement will be a complete set of financial forecasts for three years, which forms the basis of applications to other Enterprise Ireland supports (such as the Stream 1 Liquidity support above). This makes it a very worthwhile exercise, plus you will get valuable advice about initiatives and actions that will help mitigate risks to the business and ensure you are accessing the finance you require.
More details about this grant, including a Reference Document and a template for the Output Report are available on their website.
Enterprise Ireland Evolve Strategic Planning Grant
This grant offers up to €5,000 (80% grant aid) to Enterprise Ireland clients to help cover consultancy costs in the areas of strategy, market development, innovation, operations, people, and finance. The assignment should help determine how the company should respond to the threats and/or opportunities that have arisen as a result of changes to the trading environment.
Areas the consultant might look at are:
- Opportunities as the market evolves and changes.
- Product and service innovation.
- Commercial considerations – costs, pricing, logistical arrangements, etc.
- New opportunities in new markets.
- Optimising supply chains.
- Scenario planning for markets over the next 2-3 years.
- Analysing the challenges of operating in affected markets.
- Reviewing challenges affecting the current business strategy, priorities, and operating models.
More information about eligibility and a link to the online application process are available on the EI website.
Revenue’s Temporary Business Energy Support Scheme (TBESS)
This scheme was recently extended to July 2023, so if you haven’t yet claimed it, you still have an opportunity to do so. It’s also expected that kerosene costs are going to be included in the scheme shortly.
If your business has experienced a significant increase (at least 30%) in electricity or gas costs, you can claim for 40% of energy bill increases during the period of September 2022 to February 2023 AND 50% of energy bill increases during the March 2023 to May 2023 period (this is due to be extended to July 2023).
The “significant increase” threshold was 50% when the scheme was first introduced, but it has dropped to 30% so if you didn’t think you qualified before this may have changed. The current upper monthly limit on payments is €15,000 (up from €10,000) for each qualifying business or €45,000 (up from €30,000) for each qualifying business that operates across multiple locations.
You register and submit claims for this scheme via Revenue Online Services (ROS). You can start making claims for past periods straight away, and claims for current periods will become open in due course. It’s a pretty straightforward scheme to apply for and you don’t have to make any of the calculations because Revenue does that for you.
Full details about the scheme, including eligibility criteria and ‘how to’ videos are available on the Revenue website.
The government has plenty of funding to cushion the effects of crises such as the one in Ukraine. Companies can use the soft loans and grants currently available to mitigate these effects and strengthen their business. A good first step could be the Crisis Response Business Financial Planning Grant, as it will fully fund a financial analysis of the business and identify what funding you could go for. Talk to your Enterprise Ireland Development Advisor to get started.
