STRUGGLING businesses ‘may simply not be there’ when the economy reopens unless further support is given, a Letterkenny accountant has warned.
Mr Cathal Roarty, owner of Farren Roarty Accountants, said that many small businesses across Donegal are ‘hanging on for dear life’.
While the Covid-19 pandemic is causing a nationwide economic slowdown, it has hit small businesses particularly hard – especially those owned by low-income entrepreneurs.
In March, small business owners braced for what seemed like a few weeks of financial pain. But as the coronavirus pandemic — now in its eleventh month — drags on, many continue to operate at limited capacity or have shuttered completely.
“The retail sector, those in the service industry and tourism related businesses in particular are hoping that the country gets back up and running shortly because the Covid Restrictions Support Scheme (CRSS) is supposed to run out by the end of March,” Mr Roarty said.
The CRSS is available to businesses that were required to prohibit or considerably restrict customers from accessing their business premises as part of Covid-19 restrictions.
“Businesses who find themselves in the most difficulty are those paying rent or who have bank loans. They’re all looking over their shoulder.
“An added problem is relating to Ulster Bank’s withdrawal from the market. That leaves us down to two or three banks – none of whom appear to be quick to lend to business.
“I have one case where the bank is saying to a client that while it’s a good project they don’t want to see them until Covid is out the door.
“Pubs are closed, restaurants are closed, barbers and hairdressers are all closed and they don’t know which way to turn. Many of them are hanging on for dear life,” Mr Roarty said.
Extensions to the pandemic unemployment payment (PUP), employment wage subsidy scheme (EWSS) and Covid restrictions support scheme (CRSS) have been discussed at government level together with proposals to support businesses that do not qualify for weekly payments.
“It’s very close to tipping point for many small businesses – many of whom will soon have to sit down and look at where they are at. They’ll have to see how deep they’re in (debt) and ask themselves if they can see a way out. If so they might be able to continue but, unfortunately, for many, they won’t see a way out and will have to look for advice in that regard,” Mr Roarty said.
“They can’t be allowed to drift on and I’m concerned about the long-term future of many such businesses,” he added.
Mr Roarty also pointed to Brexit and its economic impact on Donegal.
“Overall, I believe that the economy is sound and will come back again. I see no difficulties in that regard. It’s different to 2008 when, for many, they couldn’t see a light at the end of the tunnel. That said, the sooner the vaccine is rolled-out and we get businesses re-opened the better.
“In fairness, landlords and banks are working with people as they can see the bigger picture. However, I remain concerned about anybody who is paying rent and getting by on a fairly thin margin. Many of these businesses will still need help even after they reopen.
“If you take Covid out of the equation, the economy is robust although the effects of Brexit hasn’t fully filtered through yet,” he said.
“There’s still far too much uncertainty in the air,” Mr Roarty added.
While a number of small businesses in Donegal have closed permanently since the pandemic began, it’s hard to give an exact figure.
The Head of Enterprise in Donegal Mr Michael Tunney said almost 700 companies applied for the Business Continuity Voucher (worth up to €2,500) in Donegal last year to develop short-term and long-term strategies to respond to the Covid-19 pandemic.
It was the Government’s first response to enable businesses to address the Covid-19 challenge and speaking at the time, Mr Tunney said that he had concerns about the future viability of many of those companies.
“Looking at the kind of businesses, their turnover and the challenges facing them I felt at the time that forty per cent of them may not be around next year (2021).
Unfortunately, my views haven’t changed and, if anything, the number will be higher,” the Head of Enterprise added.
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