One-in-three small businesses are behind on their bills or finances

Slightly more than half of the 300 small business owners and key financial decision-makers profiled in the research said their firms were still suffering the long-term effects of the pandemic.

A huge majority – four out of every five – said it was getting harder to keep their small businesses going with almost all hospitality businesses saying this.

The research paints an alarming picture of Ireland’s landscape for small businesses, whose leaders are overwhelmingly pessimistic about the future and feel cut off from Government support.

Only 61pc are making a profit, despite the relative strength of the economy, with an even smaller proportion of hard-hit hospitality firms in the black.

Nearly two-thirds of businesses in the hospitality sector said their cashflow was only poor to fair – a sign of financial distress in the industry.

Meanwhile, one-third of all SMEs said they were behind on their financial obligations and cannot access affordable credit.

Only a quarter said they believe their business will be doing better in the future.

“The survey suggests that some parts of the small business sector are in good financial health while others are really struggling with warning signals for the future,” said Grid Finance chief executive Derek Foley Butler.

The major drivers behind the pessimism seem to be high prices for energy and raw materials.

About four-fifths of those surveyed said higher energy prices had had a major impact on the functioning of their business, while a similar proportion said the same about raw materials.

The cost of raw materials was a problem for almost every hospitality business profiled in the survey, with 96pc saying it impacted in a big or very big way.

But perhaps of most concern in terms of the operating environment for SMES was the finding that two-thirds of businesses did not think the Government understood their needs when formulating policy.

This finding was borne out by the statistics on businesses availing of State supports for Covid and inflation.

According to the survey, more than one-third of small businesses did not participate in any of the State Covid support schemes, while only 28pc were currently receiving any Government support.

Just 22pc were using the Temporary Business Energy Support Scheme, the €1.3bn fund to help businesses cope with last year’s steep rise in gas and electricity prices.

Data released by Revenue, which administers the scheme, shows only €75m of that money has been paid out, putting the scheme on track to distribute about 10pc before it closes for applications at the end of the month.

Grid was founded 10 years ago as a peer-to-peer lender for SMEs, but pivoted to cash advance lending in 2017. This year Mr Butler created the Grid Foundation, a not-for-profit advocate for SMEs with a focus on developing financial resilience in the sector.