THIS is a strange year indeed and an even stranger time in business.

All business norms are gone out the window and suddenly businesses are faced with potentially crisis after crisis. Therefore, for your business, I am going to suggest a number of items that could be looked at that, that will help you in making correct decisions in this time of uncertainty.

SHORT/MEDIUM TERM CREDIT

Is your business going to suffer a cashflow deficit? This will have to be financed by means other than creditor or bank overdraft. The best way to deal with this is:

  • Engage with your bank now.
  • If engaging/when engaging with your bank and looking for medium-term funding facilities you should enquire about the Strategic Banking Corporation of Ireland [SBCI] future loan growth scheme which is operated by the pillar banks. An application process is available whereby you can be approved in principle and then apply to your main banks for this type of funding.

    • The funding/loan is unsecured and is available at a rate of 4.5% for loan amounts of €50,000 up to 8-10 years.

    There are also loans available from Micro Finance Ireland for businesses whose profits or turnover kwill be down as a result of Covid-19, and who are not in a position to borrow frlom other lenders. Consider this carefully if you are in this position. While the loan rate may be slightly dearer on this loan the important thing is that the finance is available.

    Other items that would need serious consideration include:

    1 Defer capital investment. This is not the year to do capital investment unless it is absolutely necessary. Defer it, preserve cash on the business but deferring does not mean abandoning. Make plans that when things are better that you would look at it.

    2 Shop around, look for cheaper suppliers. This is a time to review your suppliers.

    3 Look at the different schemes available from the Government and are you able to avail of them?

    4 Covid-19 unemployment payment for farming /bloodstock. While the legislation refers to those ‘ceasing trading’ it has been defined that ceasing trading means unable to sell animals as a result of market conditions.

    Are you in this category? If you are, at this stage you can apply for the €350 per week pandemic payment. You should go online and look for Covid Pandemic Self-Employed Unemployment Payment and apply for it.

    5 Have you employees? Have you reviewed the employees’ tax status? Have you supplied employees with benefits e.g. company car etc.? Revenue have issued some guidance in relation to benefits and how they will be taxed in the current environment. It is worthwhile looking at this. However the single biggest item that is available for employers is the wage subsidy scheme, if you meet thses conditions:

  • Your business is affected by the Covid-19 pandemic.
  • Your turnover is down by 25% or there is an expectation that it will be down in the period from March 12th to June 30th.
  • This could also have an effect later in the year in that orders or lines of business could be reduced at the moment and will lead to reduced orders, et cetera.
  • It is your intention to keep the employees on the payroll.
  • You are in a position to pay them on top of a wage subsidy.

    • We are now into the operational phase of the wage subsidy scheme. This operates by looking at the employee’s average pay for the months of January and February and, depending on the rate of pay, employers can get up to 85% of a subsidy, provided they meet the other conditions.

    In simple terms the subsidy is as follows:

  • Where the average take home pay is below €412 per week 85% of the average pay.
  • Where the wages are between €412 and €500 a flat rate subsidy of €350.
  • Between €500 and €586, 70% of the average take home pay up to a maximum of €410.
  • After this, up to an amount of €960 per week it is tiered.

    • While you may not have considered this previously please do so now. If your employees are over 66 years of age one can still apply for it on this scheme, whereas for the Covid Pandemic Unemployment Payment of €350 per week the person has to be under 66 years of age.

    TAXATION

    Have a look at your current financial year and see are there opportunities to reduce your current year tax bill.

  • If you have children, are they working on the farm? If they are, register them for wages and put them in on the farm.
  • Are there more repairs being done on the farm that capital investment is being postponed?

    • Remember, this is a good time to look and review your business, finances, tax and cost reduction.

    Web: ifac.ie.