Small and medium-sized businesses are the foundation of every economy. Regrettably, in times of crisis, private enterprises are also among the first to face financial issues. Restrictions caused by quarantine dramatically slow down business activities and, in some cases, force companies to shut down. According to the forecast of the International Labor Organization, about 25 million people may lose their jobs due to the COVID-19 pandemic. The European Union and North America are the two regions that will take one of the largest impacts. Against this background, most governments are looking for ways to support firms that suffer from the financial impact of the Coronavirus outbreak. Let’s take a look at programs countries came up with to help their businesses survive the recession.
According to the Minister of Economy and Finance Bruno Le Maire, France will provide economic assistance of €45 billion to enterprises and employees. €8.5 billion out of this money is aimed at helping companies pay salaries to temporarily suspended employees. The French government has promised to do everything possible on its side to save jobs.
The French government introduced the Partial Reduction of Activity scheme to lighten the load for affected businesses. It sets out to finance up to 70% of employees’ salary provided that it doesn’t exceed 4.5 times of the minimum wage. In March alone, more than two-thirds of the country’s companies expressed a desire to take advantage of the state program.
The measures also include the deferral of all tax and social payments in March and April. In the future, these payments may be canceled for enterprises on the verge of bankruptcy. In addition, the authorities intend to provide €300 billion for loans to small and medium businesses.
The Bundestag has adopted a number of social packages totaling more than €750 billion to support enterprises and citizens during the Coronavirus pandemic.
€156 billion will be allocated to help small businesses and individuals, which include, among other things, a reduction in federal tax revenues by €33.5 billion. €50 billion of this money will be targeted to aid self-employed individuals, as well as small businesses that are not able to obtain a bank loan. Companies with up to five employees will be able to receive a one-off payment of €9 000. Those with up to 10 employees are eligible for €15 000.
Berlin will also provide €500 billion to recapitalize large companies (with 250 or more employees) that faced a severe downturn due to the pandemic. At the same time, the government may acquire a stake in such companies to mitigate financial shock.
Even before the introduction of emergency measures, Germany has been exercising the Kurzarbeit system to prop up the faltering economy. It allows covering up to 60% of wages (or 67% of wages for those who have children) from the state funds. During the 2009 crisis, Kurzarbeit helped save 1.5 million jobs. This year, Germany is preparing to support 2.5 million people.
The UK government is loosening bankruptcy laws to allow businesses unable to pay off debts to continue operating. The authorities allocated £330 billion (approx €380 billion) in loans and guarantees to support businesses along with £20 billion (€23 billion) in the form of tax benefits and cash subsidies. HM Revenue and Customs also deferred VAT payments for the current quarter.
Within the framework of the government-developed Coronavirus Job Retention Scheme, employees who cannot work during a pandemic will receive 80% of their salary / income per month (up to £2.500/ €2860). The aid is also envisioned for self-employed citizens. Moreover, employees have the opportunity to receive a one-off social payment and tax subsidies of up to £1,040 (about €1190).
The country that has been suffering the severest collapse caused by Coronavirus couldn’t boast the strongest economy even before the crisis. Nevertheless, in early March, the government introduced tax incentives for businesses. The government plans to mobilize €25 billion to combat the economic consequences of the Coronavirus outbreak. €10 billion out of these funds are designed to prop up individuals and entrepreneurs.
All employees with a total income of less than €40,000 per year who continue working during the quarantine are eligible for a small bonus of up to €100 per month. For those people who cannot work due to lockdown, the government has provided special benefits.
On top of that, the government increased loan guarantee funds for small and medium-sized businesses. The authorities promise compensation to companies that have lost more than 25% of their profits. In addition, loan and mortgages payments for businesses will be suspended – they will be covered by state guarantees.
Baltic and Scandinavia
Estonia put up €2 billion towards the local economy, which is 8% of the country’s GDP. According to the Estonian Prime Minister, this money will help mitigate the harshest initial phases of the crisis, support businesses, and reduce the number of bankruptcies. Another €250 million will be used to combat unemployment. The state agreed to cover the expenses of the first three days of sick leave in March, April, and May.
Along with that, Estonia will provide financial aid to employers whose turnover decreased by at least 30% compared to the previous year and who are forced to dismiss 30% of staff or reduce wages by 30% due to Coronavirus.
The Danish government undertakes to cover 75% (but not more than €3077) of the salary of each employee who works on private companies affected by the downturn. However, the mandatory condition for this kind of support is the preservation of the pre-crisis number of employees. The remaining 25% of payroll must be paid by a company. The program will run until June 9th. At the same time, employees are required to take five days of compulsory leave during the quarantine. There is also a deferral of VAT payments for businesses.
In Sweden, the government pledged to pay sick leave to employees of limited liability companies equal to 80% of their salary. Owners of such enterprises have the right to obtain up to 80% of their estimated pre-tax income. Also, in the case of forced quarantine, self-employed persons are entitled to receive about 80% of their normal income.