Financial headwinds loom for small business in early 2026, Azets Ireland has said, even as the number of businesses looking to restructure their debts through the State’s small business rescue scheme fell by 23 per cent this year.
Unveiled in 2021 as a more cost-effective alternative for smaller businesses to the examinership process, the Small Companies Administrative Rescue Process (Scarp) facilitates simplified out-of-court debt restructuring for viable small and micro companies.
In its twice-yearly analysis of the Scarp statistics, restructuring firm Azets said 23 applications were made in 2025, down 23 per cent from last year.
Some 374 jobs have been saved through the Scarp process this year, it said.
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Hospitality businesses have accounted for the highest proportion of Scarp cases in 2025, at 30 per cent, followed by construction firms (11 per cent) and retail businesses (7 per cent).
Geographically, seven out of 10 cases related to businesses based in Dublin, with 11 per cent located in the wider Leinster region, 15 per cent in Munster and 4 per cent in Ulster.
Azets said it has provided advisory services in 37 of the 108 Scarp cases undertaken over the past four years, protecting 541 jobs through various successfully concluded rescues, including the Beyond the Pale music festival earlier this year.
Dessie Morrow, advisory and restructuring partner at Azets Ireland, said that while the number of Scarp applications fell this year, 2026 is set to be a challenging year for small businesses.
“There are growing signs of a two-track economy in Ireland,” he said. “While certain aspects of the multinational sector continue to grow, many small indigenous businesses are struggling to cope with the challenges of rising costs and economic uncertainty.
“While many of these businesses, particularly in the hospitality and retail sectors, may manage to continue trading through the busy festive season, more firms could face closure in early 2026.”
Mr Morrow said the introduction in January of pension auto-enrolment, as well as minimum wage increases, will create “further financial headwinds” for small and micro businesses.
He said that for companies that find themselves in financial distress, Scarp is an “important restructuring option” that can provide them “with the necessary flexibility to come up with pragmatic solutions to financial difficulties”.
Earlier this year, Azets said the Government should look at ways of making the scheme more attractive, such as removing the clause that allows the Revenue Commissioners to exclude tax debts from a rescue process if the company has a history of tax noncompliance.
In response, Revenue said it “remains a committed participant in the Scarp process”. “Our opt‑out right is reserved strictly for cases involving noncompliance, audits or ongoing tax appeals,” Revenue said.
The tax authority said it had opted out in just 19 of the 99 Scarp applications made since 2021.
Azets said 72 per cent of the 108 Scarp applications since the scheme’s inception have resulted in successful outcomes, saving 1,448 jobs.
