What the €257 Million Irish Business Grant Means for SMEs

In what has been widely hailed as “recognition of the costs faced by SMEs across the country,” the €257 million Increased Cost of Business (ICOB) grant was announced by the Minister for Enterprise, Trade and Employment Minister Simon Coveney in December 2023. The much-anticipated scheme will be paid in one-off grants to small and medium-sized businesses during this, the first quarter of the year.

Minister Coveney’s statement, issued on 5 December, made clear that “this payment is not intended to compensate for all of the increased costs”, but that the money “will provide a welcome cash injection for many businesses.” The fund, which will reach 143,000 businesses, and therefore 95 per cent of all rateable businesses in all corners of Ireland, has been made available due to the increase in costs through several factors to SMEs throughout the country.

Amongst those who warmly welcomed the news was Minister of State for Business, Employment and Retail, Neale Richmond, who emphasised the importance of SMEs, commenting at the time: “This scheme is targeted to small and medium businesses, many of which are at the heart of communities right across the country and who are most impacted by these (rising business) costs.”
Minister for Trade Promotion, Digital and Company Regulation, Dara Calleary agreed, adding she “particularly welcomed” the adjustments that were made to the original scheme design to include more businesses and the efforts made to target the “small and micro enterprises who are part of the fabric of every community across the country.”

Minister Calleary emphasised: “Along with the other government schemes and regulatory responses that have been introduced, I want small and micro businesses to know that we are committed to supporting their long-term viability.”
But, what and who exactly does the business grant cover? Let’s explore this in more detail.

The Increased Cost Of Business Grant In Detail

Following Minister Coveney’s winter announcement, SME owners were asked ample questions. What expenses does the grant cover? Does it include operational costs, for example? And what about technology upgrades and even training? All of these are arguably vital during times of financial uncertainty, ever-rising business costs and attempting to futureproof an SME all within the new 2024 regulations.

In short, the grant will be targeted at small and medium businesses operating directly within premises that are commercially rateable by a local authority. It is a one-off grant aid provision and will have no bearing on the commercial rates paid by firms. How it is spent is at the discretion of the SME and forms part of the government’s long-term commitment to supporting small and medium-sized enterprises throughout Ireland and hopefully contribute to their sustainability.

The grant is intended to be paid at a rate of half the enterprise’s commercial rates bill in 2023, for firms paying up to €10,000 in rates. For those paying between €10,000 and €30,000 in rates, they will receive a grant of €5,000 with the ICOB grant capped at €5,000. No grant will be available for firms paying more than €30,000.

Whilst no firm details have yet been announced about the procedure for claiming the ICOB grant, a similar grant was processed directly from local councils during the Covid trading lockdown. Meanwhile, Minister Richmond previously stated in December that the scheme will be “readily accessible with no formal application process or paperwork.”

The Grant In Action: Real-World Implications for SMEs

The €250 million SME support package will provide much-needed relief for firms facing substantial government-imposed increases in labour costs (up to 25 per cent by 2026).

Whilst discussing the grant back in October, business group, Ibec, said the support package will provide “much-needed relief for firms facing substantial government-imposed increases in labour costs.”

While Ibec said “more work needs to be done in this area”, it is crucial that this scheme “becomes operational as quickly as possible, remains easily accessible, and serves as the starting point for a broader conversation about the transition to a Living Wage, pensions auto-enrollment, and other significant labour market changes over the coming years.”

The Irish SME Association stated in October in response to the 2024 Budget that going off an “aid package of €250m for 130,000 businesses based on their rates payments, this support averages at €1,923 per business, which is €1,305 below the pay increase. “It remains to be seen if this will be sufficient to keep them going,” ISME stated at the time.

How SMEs Might Best Utilise The Support Package For Maximum Benefits

It can be hard to know which area of your SME to invest in when on the receiving end of a grant. Some strategies to maximise the impact on your SME that HR professionals might consider are:

Financial Planning

Where do your SME’s most urgent needs lay? Prioritise those areas such as utilities, employee wages and rent if appropriate to have the most impact on your SME.

Investment

Could your SME benefit from a digital infrastructure upgrade or improving your online presence? If so, investing in e-commerce or working to improve your website could increase your online business and visibility.

Skill Development

Training programmes may be a great option for upskilling existing employees in areas from customer service, to new technologies, and more industry-specific skills.

Marketing

Marketing and advertising campaigns can target new customers. Options can range from targeted online advertising campaigns, to paid-for social media posts and more.

Sustainable Savings

Energy-efficient upgrades are worthwhile investing in as they can lead to long-term, sustainable savings.

Collaborating with Suppliers

This can be the ideal opportunity to sit down with reliable suppliers and where possible negotiate better terms to cost-save.

Does The Grant Go Far Enough?

“Half a loaf is better than no bread,” is the old proverb which may come to mind.

Whilst the ICOB grant offers assistance, opinions on whether it goes far enough may vary.

The ICOB grant aims to alleviate some financial burden for those eligible SMEs, but its impact depends on individual circumstances and the specific challenges faced by each unique business, as well as how well the grant is utilised by each SME.

When one considers the heightened new administrative load due to new 2024 regulations and how it affects SMEs, there is no getting away from the increasing cost of business especially for SMEs. Irish SMEs are facing a changing fiscal landscape. The Budget 2024, announced on October 10, 2023, introduced significant adjustments in taxation and incentives, vital for SMEs to understand and adapt to.

There were key changes in the areas of corporation tax, capital gains tax, VAT, capital acquisition tax, investment incentives, R&D tax credits, capital allowances and more. These changes are essential for businesses to understand and adapt to 2024.

While this grant provides a welcome cash injection, it will not fully compensate for all increased costs. However, it represents a step toward supporting businesses during these challenging times and should be viewed as a positive effort by the government to assist SMEs with rising business costs.

Potential Strategies for SMEs

As previously touched upon, the grant may help SMEs in numerous ways, including mitigating rising expenses. This injection of funds can help SMEs manage increased costs more effectively. During these challenging times, the grant may allow SMEs to cover essential costs, such as utilities, rent, and raw materials. As a result, SMEs will be better positioned to sustain their business during challenging economic conditions.

SME Success

The announcement of the ICOB grant is warmly welcomed, with many SMEs looking likely to use the grant to invest in research, their online retail space and presence, diversification, sustainable practices or even developing new products. Whilst it is limited, the grant will hopefully encourage SMEs to continue to adapt and evolve in an increasingly costly market due to the administrative load and rising cost of business in 2024.

Because a thriving SME sector translates to more employment opportunities for local communities, the success of SMEs directly influences community well-being.

It is hoped this investment from the government through the ICOB grant will help support Irish SMEs and help empower local businesses to navigate the current challenging business landscape and continue to adapt and evolve, creating a vibrant, thriving and resilient SME sector that is here to stay.