It was a shock for many entrepreneurs: cinemas, theaters, fitness studios, beauticians, restaurants – they have all been in lockdown mode again since November. “This can be fatal for some companies if they no longer have any reserves. It could cost them their existence, ”says Eckhard Sudmeyer, Managing Director of the Braunschweig-Lüneburg-Stade Chamber of Crafts, classifying the new ordinances. Florian Löbermann, managing director of the Braunschweig Chamber of Commerce and Industry (IHK), also sees the partial lockdown as an economic burden. “Many companies are clearly weakened after the first lockdown,” he explains. The federal government now wants to counteract this with three measures: 10 billion euros in extraordinary economic aid, quick and easy loans and a further extension of the bridging aid.
Who will be reimbursed how much?
In the case of extraordinary economic aid, the government pays the companies up to 75 percent of the turnover for the same month last year in order to support them with running fixed costs. According to the Federal Ministry of Finance, the amount is calculated from the average weekly turnover in November 2019, the flat rate is paid for each week in lockdown. “In order not to have to go into detailed and very complex cost accounting, the fixed costs are flat-rate”, the ministry explains in a press release.
The one-time flat rate of a maximum of 75 percent applies to companies with up to 50 employees, there are fewer in larger companies. Younger establishments that only opened after November 2019 can use the turnover for October of this year as a comparison value. If a company has already received state subsidies – such as short-time work benefits or bridging allowances – the payments made so far are taken into account. However, Federal Minister of Economics Peter Altmaier (CDU) does not want to count the out-of-home sales at restaurateurs – in times of lockdown the only possible source of income – towards the aid payments. He made that clear at the meeting of the Union parliamentary group, says Vice-parliamentary group leader Carsten Linnemann the “Westfalenblatt”.
“A partial reimbursement of the loss of sales is the right way in the case of temporarily ordered compulsory closings,” said Sudmeyer, managing director of the Chamber of Crafts, welcoming the measures. But he suggests further relief, for example with taxes and duties. IHK managing director Löbermann, however, wants the government to “fully compensate” for the losses of the particularly affected branches of industry in the lockdown.
Who can submit an application?
All companies, businesses, self-employed, associations and institutions that had to close due to the new lockdown or that are unable to carry out their work are allowed to submit an application. This applies, for example, to theaters, cinemas, restaurants and bars as well as discotheques or fitness studios, sports facilities and swimming pools.
Entrepreneurs who are indirectly affected by the measures – such as major suppliers who supply restaurants or pubs – should also be supported, reported the German Press Agency (dpa) on Wednesday evening, referring to a paper from the federal government. Minister of Economic Affairs Altmaier tied the aid for these companies to the condition that not only “a few percentage points” of sales were lost in November. The prerequisite now is that they regularly generate 80 percent of their sales with companies directly affected by the measures.
Retail also wants aid
Trade associations have already appealed that traders should also be taken into account when providing assistance. This is also what the Harz-Heide Association would like. “A current trend survey shows that three out of four companies expect significant sales losses due to the measures. If the costs remain fully open, keeping the stores open does not really pay off from a business point of view, ”reports Mark Alexander Krack, Managing Director of the trade association.
However, according to the association, the retail trade should not receive the same amount of aid as closed businesses. Rather, the federal government should compensate for the sales shortfalls compared to the same month last year by 50 percent. So if fewer people went to the city centers and retail sales fell by 50 percent, 25 percent would be paid as compensation in the course of the corona aid. “After all, it is usually the second month of the year with the highest sales for retailers,” says Krack. It is unclear whether the dealers’ wishes will be fulfilled.
Where is the money requested?
The Federal Ministry of Finance points out that a simplified application should be made via the bridging aid platform (www.ueberbrueckungshilfe-unternehmen.de). However, applications need time to be processed – time that many companies could lack. Altmaier has therefore announced the goal of making at least advance payments before the end of November. According to the dpa, the Minister of Economic Affairs said this on Tuesday in an online meeting of the Union parliamentary group in the Bundestag. If necessary, new ways will be found, for example through the savings banks and Volksbanks, so that the money is quickly available.
Is there any further help?
Even self-employed people and companies with fewer than ten employees can now apply for an express loan from the KfW Reconstruction Loan Corporation. With the express loan from the state development bank, companies can take out a loan of up to EUR 300,000, provided they are in “sound economic circumstances” according to the Ministry of Finance. The amount of a loan is dependent on how sales were in the previous year. A risk assessment no longer takes place, the state is fully liable for the loan. For the house banks through which the KfW express loan is applied for, there is no risk that the money might not be repaid.
In addition, the Ministry of Finance is working on a further extension of the bridging aid, which has supported many companies in various industries with grants since the spring. “It is to be expected that some areas of the economy will have to accept considerable restrictions in their business operations in the coming months,” said the ministry, referring in particular to the culture and events sector. Bridging Aid III is intended to support companies from January to June 2021, until December 2020, Bridging Aid II, which has been applied for since October, will apply.
Who will pay off the debt?
The Harz-Heide trade association would also like other application criteria for bridging aid in the coming year. “The fact that a substantial amount of the planned funds for the bridging aid has not yet been called up today is because the eligibility criteria are too high,” says Krack.
The federal budget has made available a total of 25 billion euros for financial aid. The 10 billion euros in economic aid also come from this pot. The federal government finances the corona aid through new debts. At the moment, these burdens still seem manageable, says IHK Managing Director Löbermann, but also warns: “If the pandemic persists and corona-related financial expenses continue to rise, the loss of prosperity for future taxpayers should become more noticeable.”
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