The Department of Enterprise is facing a bill of up to €38 million as a “reclassification issue” means that as many as 6,000 businesses could be eligible for additional payments under two SME grants.
Minister of Enterprise Peter Burke was warned that the number of SMEs eligible for additional payments could be even higher than the estimates.
The issue stems from a number of hospitality, retail or beauty businesses incorrectly categorising themselves in their applications for the Government’s Increased Cost of Business (ICOB) grant. As part of the application for the first round of the grant, businesses were asked to self-declare their business type, but SMEs from all sectors were eligible for the grant.
The second round of the grant, however, “specifically targeted businesses in the retail, hospitality and beauty sectors”. As a result of the classification issue, some businesses from these sectors were not eligible for the second round of the ICOB grant.
Receiving the latter ICOB round was part of the eligibility requirement for the Power Up grant launched as part of Budget 2025. Thus, these eligible businesses missed out on two rounds of funding.
More than €400 million was paid to SMEs in 2024 under the ICOB and Power Up grants, which the department described as “very successful”.
Based on an analysis by the department in a briefing document given to the Minister, it is “anticipated that up to 6,000 businesses could be eligible for a second payment under ICOB and the Power Up grant as a consequence of the reclassification, with an estimated associated grant and administration cost of €38 million”.
However, officials in the department warned Mr Burke that “there is potential for the actual number of reclassifications to be higher”.
The Minister was informed that the cost of the appeals process will be met by “savings identified within the department’s capital allocation” or with an additional budgetary allocation if “sufficient savings cannot be identified”.
In a statement to The Irish Times, a spokesperson for the department said that “following the launch of the Power Up grant the department became aware of issues in relation to businesses who misclassified their business sector and subsequently became ineligible for the grants”.
In order to rectify the “reclassification issue”, the department is set to open an appeal process for businesses affected with the process that will be administered by local authorities.
This appeal process has not formally opened yet, but the department said it intended to open the appeals process “as soon as possible” and that local authorities would contact the businesses eligible to appeal their sectoral classification.
Businesses which did not receive the first ICOB grant will not be eligible to apply under the scheme, the department told the Minister, and the criteria for the scheme remains the same. The eligibility classification and appeal decisions will be made by the local authorities.
Under the ICOB, businesses received a proportion of their 2023 commercial rates bill back in the form of a grant as part of a €257 million budget. The Power Up grant was a €4,000 payment to a limited set of sectors with a budget of €170 million.
