Finance and funding

The measures that have been put in place in Belgium are mainly at the regional (Brussels, Flanders and Walloon) level.

Brussels region

The Brussels Region has provided for COVID-19 compensation of €4,000 for businesses forced to close and a one-off premium of €2,000 will be allocated to businesses not entitled to the COVID-19 compensation. In addition:

Cash-flow support totalling €20 million has been made available for affected companies through the granting of public guarantees, via the Brussels Guarantee Fund, on bank loans;
A moratorium has been put in place on the capital repayment of loans granted by Finance&invest to affected companies;
There has been an increase of €200,000 for the budget of the Centre for Businesses in Difficulty; and
Special measures have been introduced for cultural, hospitality/tourism, and social economy and service voucher sectors.

Flanders region

The Flanders Region has provided for two types of COVID-19 compensation payments of €4,000 or €2,000, and a one-off premium of €3,000 for businesses not entitled to the COVID-19 compensation. In addition:

Flemish companies may benefit from a bridging loan guaranteed by the Flemish agency PMV for existing non-bank debts up to 12 months and up to a maximum amount of €1.5 million with a premium of 0.25% per annum (instead of 0.5%); and
Additional budget and special measures have been provided for the tourism sector.

Walloon region

The Walloon Region has provided for a COVID-19 compensation payment of €5,000. In addition:

Additional guarantees have been provded on short-term credit lines and investment credits may be granted by Walloon regional agencies;
Loans without private counterpart for a maximum amount of €200,000 with a grace period of one year and a fixed interest rate of 2% may be granted by Walloon agencies;
An emergency loan to support the cash flows of cultural and creative enterprises has been launched; and
The staggered payment of water bills may be permitted for Walloon companies encountering financial problems.

Federal level

At the federal level, a deal has been negotiated with the financial sector comprising the deferral of payment of credit lines until 30 September 2020 without charge and the activation of a guarantee scheme (bridge credit facility) for new loans and credit lines.

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Brussels region

The Brussels €4,000 payment is available to businesses operating in Brussels that are obliged to close and are active in one of the sectors specifically listed in the Brussels Government Decree (including catering, accommodation, retail trade with the exception of food stores, pharmacies, press outlets, and service stations)

The €2,000 one-off premium is only available to small businesses (with a maximum of five full-time employees) and to self-employed workers who were not obliged to close but whose activities have been heavily affected by the COVID-crisis.

Flanders region

The Flemish €4,000 payment is available to businesses operating in Flanders which are forced to close (completely or partially) during the week while the lower €2,000 indemnity is allocated to companies that are forced to close during the weekend, in either case as a consequence of the measures taken by the Belgian state in order to limit the spread of the coronavirus.

The €3,000 Flemish premium is available to businesses that are allowed to continue working but have a turnover loss of at least 60% for the period of 15 March 2020 until 30 April 2020, compared to the same period in 2019, or for new businesses that were not active in 2019 on the basis of their financial plan.

Walloon region

The Walloon €5,000 payment is available to small and very small enterprises, and to the self-employed , active in one of the sectors specifically listed in the Walloon government decree (including catering, accommodation, retail trade with the exception of food stores, pharmacies, press outlets, and service stations) and which have been completely closed or which have ceased operating as a result of measures taken to limit the spread of coronavirus.

Federal level

The federal-level deferral of payment of credits can be requested by companies permanently based in Belgium if the coronavirus crisis causes payment difficulties. In addition:

The business concerned must have had no outstanding instalments relating to credits, taxes or social security contribution as at 1 February 2020;
Any outstanding instalments as at 29 February 2020 must be no more than 30 days overdue;
The business must have fulfilled all its contractual credit obligations with all banks during the 12 months ending 31 January 2020; and
The business must not be in the process of active credit restructuring.

The federal-level guarantee scheme is for non-financial institutions, small and medium-sized enterprises and self-employed workers, provided that:

The business concerned had no outstanding instalments as at 1 February 2020; and
Any outstanding instalments as at 29 February 2020 were no more than 30-days overdue.

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Support measures that apply automatically (without filing any request)

VAT. Automatic deferral of deadlines for filing returns and deferral of payment deadlines by two months. Accelerated VAT refunds are available where certain conditions are met.
Payroll/wage tax. Automatic deferral of payment deadlines by two months.
Other taxes. For taxes relating to the tax year 2019-income 2018, established as of 12 March 2020, an additional payment period of two months is automatically granted beyond the normal payment deadline for the payment of personal income tax, corporate income tax, legal entity income tax and non-resident income tax.

Support measures that can be applied for

Requests for payment plans (excluding interest on arrears and fines) may be granted by the Belgian tax authorities in relation to payment of certain taxes owed as at 12 March 2020 (comprising withholding tax, VAT, personal income tax, corporate income tax and legal entities income tax).
Applications can be submitted by any individual or legal entity having a business number with the Crossroads Bank for Enterprises, which is able to demonstrate that it is experiencing financial difficulties as a result of the coronavirus crisis. This measure is not available for undertakings which are in financial difficulty which is not due to the virus.

Impairment of trade receivables

The Belgian tax authority has confirmed that the COVID-19 crisis is a “special circumstance” which justifies the exemption of reductions in value on commercial receivables held on companies that are in arrears with payment of these receivables, resulting directly or indirectly from measures taken by the Federal Government.

Measures at the employer’s expense

The Belgian tax authorities have permitted a (tax free) allowance of €126.94/month (at the employer’s expense) for all workers required to work from home as a consequence of measures taken against COVID-19.

Miscellaneous tax measures

The Belgian tax authority has postponed non-essential on-site tax audits.
Application double taxation conventions between Belgium, France and Luxembourg has been temporally relaxed for cross-border workers.
Enterprises will not have to pay VAT on donations of stocks of medical equipment to hospitals and health care institutions.
Companies experiencing cash flow issues due to the crisis may be granted increased rates for advanced tax payments.
Miscellaneous measures have been taken regarding customs and excise duties.
Various measures have also been taken by the three Belgian regions

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Eligible facilities under the PGE scheme are drawn or undrawn facilities (including syndicated loans or club deals) granted by banks and financial institutions from 16 March 2020 up to and including 31 December 2020.

The total cumulative amount of loans covered under the scheme for a single business is a maximum of 25% of the turnover (based on the most recent completed financial year) or – if more favourable for young businesses – such as young innovative companies (Jeune Entreprise Innovantes), or companies and businesses incorporated in 2019 – two years of employee costs.

For companies with less than 5,000 employees in France and with turnover lower than €1.5 billion:

The state will guarantee 90% of the value of the loan(s) (calculated as the principal plus interest plus other costs).
No other security may be required by the bank(s).
The application is made to the bank(s) of the company or the individual, which will examine the request;
If the bank pre-approves the request, BPI then confirms the guarantee (which occurs automatically through issuance of a unique central number, following on-line registration by the lender of the application on a dedicated platform, including the bank(s)’s pre-approval).
If the bank(s) refuses pre-approval, the case can be escalated to the French Credit Mediator (a public institution connected to the French Central Bank that assists any business that has difficulties with financial institutions).

For companies with more than 5,000 employees in France or a turnover in excess of €1.5 billion:

The state will guarantee 80% of the value of the loan(s) for companies whose turnover is lower than €5 billion and 70% for those with turnover between €1.5 billion and €5 billion.
The application is made to the bank(s) of the company for pre-approval. The file is then examined by the Ministry of the Economy and the guarantee will be issued through an individual administrative order.
On-going discussions around prohibiting dividend distribution and share buy-back for listed companies may impact the ability of either borrowers or the banks to benefit from the scheme.

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The French government has announced the following tax measures:

Deferral of any direct taxes for a period of three months by request to the relevant Business Tax Department (Service des Impôts des Entreprises).
Remission of taxes, late payment interests or penalties: the taxpayer’s request for remission must provide evidence that payment is impossible and that tax deferral is not sufficient to overcome the financial difficulties.
Self-employed workers can adjust their withholding tax rate downwards by reducing their income for the year, their rate and their monthly down payments. Down payments can be deferred to the next due date (up to three consecutive times) and quarterly down payments once a year. Requests to adjust or defer the down payments must be made before the 22nd of each month.
Refunds for tax credits refundable in 2020, such as the Business Competitiveness Tax Credit (CICE) and the Research Tax Credit (CIR), can be requested without waiting for deposit of the corporation tax (CIT) return.
Tax deadlines are deferred from May to 30 June 2020, including balances of CIT due for 2019, CIT tax returns for 2019, declaration of the scope of consolidated group tax, personal income tax returns for 2019 and declarations and payments regarding contribution on the added value of companies or CVAE.
Companies in financial difficulty may request postponement of May tax payment deadlines from their business tax department.
Large companies (with more than 5,000 employees or turnover in excess of €1.5 billion) may request postponement of the payment deadlines provided that they do not pay dividends in 2020 to their shareholders in France or abroad, or repurchase shares in 2020.
VAT arrangements: in the event that companies are unable to gather all the documents needed to finalize their VAT returns in the current context of lockdown, a reporting system based on an assessment of the VAT due is implemented. Companies can submit an estimate of the amount of VAT due for a month and pay an instalment the following month.

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KfW Loans

The coronavirus aid programme from KfW (a German State-owned development bank) has been available since 23 March 2020 for all companies based in Germany that have temporary financing difficulties due to the coronavirus crisis. The funds for the KfW coronavirus aid programme are unlimited. The loan programme has three elements:

The Quick Loan Programme is intended to give medium-sized enterprises faster access to KfW loans. Loans are limited to €800,000;
KfW-Business Loan and ERP-Founders’ Loan are available with a loan sum up to €1 billion per business group; and
Under the direct participation for consortium financing programme, KfW participates in financing that is in line with market conditions and on the same terms as other banks. KfW assumes part of the credit risks of the financed enterprise and offers the participating banks the option of refinancing. The financing structures are tailored to the individual needs of the borrower. The programme is limited until 31 December 2020.

Federal government: Economic Stabilisation Fund Act

The Economic Stabilisation Fund provides for further stabilisation measures in addition to the KfW coronavirus aid program in the form of guarantees of €400 billion, €100 billion for government investments (recapitalisation) and €100 billion to refinance the development bank.

It aims to stabilise companies by bridging liquidity shortages and by creating the framework conditions for strengthening the capital base of companies whose existence would have a significant impact on the economy, technological sovereignty, supply security, critical infrastructures or the labour market.

Other measures

For start-ups, the federal government has announced an additional package of measures with a volume of €2 billion, which is specially tailored to their needs.

In addition to the federal government’s initiatives, the German states have also set up their own aid programmes.

For more details, please download our report (see pages 7 to 10).

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KfW Loans

Quick Loan Programme:

Loan term: 10 years.
Interest rate: 3 %.
Loan amount: three months’ turnover in 2019 – however, the maximum amount per company with 11 to 49 employees is €500k and €800k for companies with 50 to 249 employees.
Security: none required.

ERP- Founders’ Loan and KfW-Business Loan

Loan terms: five years, with a maximum of one grace year and a fixed interest rate for the entire period
Interest rate: based on the development of the capital market between 1.00% and 2.12% per annum.
Loan amount: maximum €1 billion per business group (affiliated companies), limited to:
- 25% of annual revenue in 2019 or double the wage costs of 2019;
- The current liquidity requirements for the next 18 months for small and medium-sized enterprises, or for 12 months for large enterprises.
- For loans exceeding €25 million, the amount of the loan is limited to a maximum of 50% of the company’s total debt (KfW has specified that shareholder loans etc. should be included in the calculation of total debt).
Security: collateral of up to 100% of the loan amount.

‘Direct participation for consortium financing’ programme

The KfW risk share usually may not exceed EUR 25 million or:

Twice the annual payroll in 2019;
25% of the total revenue for the year 2019; or
The liquidity requirements for the next 12 months.

The Economic Stabilisation Fund

Warranties

The fund is empowered to provide warranties of up to €400 billion for debt instruments and liabilities established by companies in order to eliminate liquidity shortages and support refinancing on the capital market. The term of the warranties and the liabilities to be protected may not exceed 60 months. An appropriate compensation must be charged for the granting of warranties.

Recapitalisation

The fund may also invest in the recapitalisation of companies. The recapitalisation measures include the acquisition of debt instruments, hybrid bonds, profit participation rights, silent participation, convertibles, the acquisition of shares in companies and the assumption of other components of the equity of these companies, if this is necessary for the stabilisation of the company. Appropriate compensation must be agreed for the recapitalisation.

The fund is only able to provide finance by taking a shareholding if the federal government has an interest in stabilizing the enterprise and if the purpose intended by the federal government cannot be achieved in a better or more economical way.

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State guarantees

Guarantees will be granted to secure loan/credit facilities entered into or renewed between 17 March 2020 and 30 September 2020 (or 31 December if the Council of Ministers approves the relevant time extension) by:

companies and self-employed workers with their registered office in Spain,
which have been affected by the economic effects of the coronavirus crisis,
provided that:
- they were fulfilling all their payment obligations on 31 December 2019 (according to data provided by the Bank of Spain), and
- they are not involved in any ongoing insolvency or pre-insolvency scenario and they are not credit institutions.

The Council of Ministers has made available the first two tranches of the guarantees for an aggregate total of €40 billion, of which €30 billion is intended for self-employed workers and SMEs and the remaining €10 billion for businesses that do not qualify as SMEs.

ICO funding

The funding offered by the ICO is available to any type of business with a registered office in Spain.

The “COVID-19/Thomas Cook” scheme is exclusively for businesses in the tourism sector that were fulfilling their payment obligations as of 31 December 2019 (according to data provided by the Bank of Spain) and were not involved in an insolvency or pre-insolvency scenario as of 17 March 2020. They must also have had a credit rating of B- or higher in the case of large companies, prior to the approval of these measures as a result of the coronavirus crisis.

Repayment grace period

Access to the grace period for repayments of loan facilities secured by means of mortgages and/or consumer credit for the acquisition of the main residence and/or properties/assets used in economic activity requires compliance with (and accreditation of) the conditions of “economic vulnerability”. The conditions are that:

the relief is required due to unemployment or, in the event of professionals and business owners, substantial loss of income of at least 40%;
a maximum limit for family income (in the preceding month to applying for the grace period) is not exceeded;
the amount to be paid under the existing facility/ies, plus the basic family expenses and supplies, must be more than 35% of the net income of the family unit; and
the mortgage charges have increased by a multiple of at least 1.3.

The grace period provisions also apply to guarantors and non-debtor mortgage providers under the same conditions (i.e. where security for a loan is provided by a third party who is not the debtor/borrower). In such cases, the non-debtor guarantor/mortgagor can request that the creditor firstly makes a claim against any assets of the debtor. If the creditor is not able to obtain the requested repayment from the debtor, then it will be allowed to claim the secured debt from the non-debtor guarantor/mortgagor.

Spain has approved very limited tax measures, as a result of the coronavirus crisis. These can be summarised as follows:

State taxes (mainly Corporate Income Tax, Personal Income Tax, including payroll tax withholdings, and Value Added Tax)

As regards, filing and payment of such taxes, only two very limited measures have been enacted:

An automatic six month payment postponement will be granted, with no late payment interest due in the first three months. Only taxpayers whose turnover in 2019 did not exceed €6 million, are eligible for this postponement and the postponement only applies to tax debts up to €30,000.
A one month filing and payment extension has been approved but only for taxpayers whose turnover in 2019 did not exceed €600,000.

Regional taxes

Extended filing and payment deadlines for regional taxes have been approved by most, if not all, Spanish Regions. The extent of the specific measures depends on the Autonomous Region concerned in each case. As a broad rule, these measures relate mainly to Stamp Duty, Transfer Tax or Inheritance and Gift Tax and may, depending on the Region, apply to all taxpayers, regardless of size.

It is also worth highlighting two specific Regions:

Basque Country: broadly speaking, the Region has jurisdiction to legislate and collect its own Corporate Income Tax, Personal Income Tax and Value Added Tax. Taxpayers subject to, for example, corporate income tax in the Basque Country may benefit from postponements or extended filing on more generous terms than those available to taxpayers subject to State corporate income tax. Legislation enacted in each Basque province should be reviewed.
Canary Islands: the Region is not within the EU VAT territory and has its own sales tax. The Region has approved a filing extension for Sales tax returns for the first quarter of 2020 (potentially applicable to taxpayers with a maximum turnover in 2019 of €6 million).

Taxes resulting from a specific assessment or in respect of which the taxpayer had already been granted a specific authorisation to postpone or pay in instalments and which will fall due during the period in which specific coronavirus crisis emergency state measures apply will also benefit from a payment extension. The final payment deadline will vary depending on when the payment would have been initially due.

Tax proceedings

Broadly, tax proceedings (such as audit or collection proceedings or certain administrative review proceedings in relation to taxes) have been temporarily halted. Each specific procedure should be reviewed to determine how deadlines or time periods should be calculated.

Moreover, the statute of limitations is also deemed to be extended during the period in which specific coronavirus crisis emergency state measures apply.

Coronavirus Business Interruption Loan Scheme (CBILS)
Delivered by the British Business Bank (BBB), this scheme aims to support primarily small and medium-sized businesses to access bank lending and overdrafts. The scheme is administered by BBB but all loans are made through individual accredited lenders (of which there are around 40). Applications must be made directly to those lenders and not to the BBB.

Full details can be found on the BBB website.

Covid-19 Corporate Financing Facility (CCFF)
The aim of the CCFF is to provide additional help to larger firms to bridge through coronavirus- related disruption to their cash flows. It is a joint scheme run by HM Treasury and the Bank of England (BoE). It works by providing funding to businesses by purchasing commercial paper of up to one-year maturity, issued by firms making a material contribution to the UK economy. Eligible companies that wish to participate must do so through a bank which issues commercial paper.

Full details can be found on the Bank of England website.

Coronavirus Large Business Interruption Loan Scheme (CLBILS)
This scheme was launched with the aim of supporting UK mid-sized and larger enterprises with turnover in excess of £45 million during the coronavirus crisis, following criticism that the two schemes mentioned above did not cater for UK companies with turnover in excess of £45 million, but which were not eligible to participate in the CCFF.

Like CBILS, the scheme is operated by the BBB via its accredited lenders.

Full details can be found on the BBB website.

Future Fund scheme
This scheme was launched to provide innovative companies with bridging capital to ensure that they can survive and potentially continue to grow during the coronavirus crisis, against concerns (discussed further here) that many private equity or venture capital-backed businesses would not be eligible for CBILS or CLBILS. The Future Fund will be delivered in partnership with the British Business Bank.

In addition, the government has announced additional support for small and medium-sized firms that are primarily focussed on research and development, which will be delivered by Innovate UK.

Further details of the Future Fund and the Innovate UK funding are available here.

Bounce Back Loan Scheme
The Bounce Back Loan scheme has been put in place to help small and medium-sized businesses affected by coronavirus to apply for loans of up to £50,000. The scheme will launch on 4 May 2020. Further information is awaited but certain details can be found here.

CBILS
To be eligible for a facility under CBILS, a business must:

Be UK-based in its business activity;
Have an annual turnover of no more than £45 million;
Have a borrowing proposal which the lender would consider viable, were it not for the current pandemic;
self-certify that it has been adversely impacted by the coronavirus crisis; and
not have been classed as a ‘business in difficulty’ on 31 December 2019, if applying to borrow £30,000 or more.

CCFF
The CCFF is available to firms that can demonstrate they were financially sound prior to the pandemic. Eligibility will be based on credit ratings (short- or long-term ratings of investment grade or equivalent). However, the BoE has amended its position to make it easier for companies that do not have a credit rating to access the fund.

The BoE will make as assessment in each case, which will draw on a range of information, including the range of banks’ internal ratings across all of a firm’s commercial bank counterparties. A company will need to have been consistently rated as investment grade by its banks to be eligible for the scheme.

In practice, firms that meet this requirement would normally be:

UK incorporated companies, including those with foreign-incorporated parents and with a genuine business in the UK;
companies with significant employment in the UK; and
firms with their headquarters in the UK.

The bank will also consider whether a company generates significant revenues in the UK, serves a large number of customers in the UK, or has a number of operating sites in the UK.

Commercial paper issued by financial sector entities regulated by the BoE or the Financial Conduct Authority will not be eligible, nor will paper issued by public bodies or authorities.

CLBILS
To be eligible for a facility under CLBILS, a borrower must:

be UK-based in its business activity;
have turnover of more than £45 million per year;
confirm that it has been impacted by the coronavirus crisis; and
have a borrowing proposal that would have been considered viable by the lender, if it were it not for the pandemic, and for which the lender believes the provision of finance will enable the business to trade out of any short-to-medium term difficulty.

Larger businesses opting to participate in the Bank of England’s CCFF scheme are not eligible for CLBILS.

Future Fund scheme
In order to be eligible under the Future Fund scheme, businesses must:

be UK registered private companies;
have raised at least £250,000 in private investment in the last five years; and
be in a position to secure private funding to match the government’s investment (which cannot exceed 50% of the total funding provided under this scheme).

Bounce Back Loan Scheme
A business can apply for a loan if the business:

Is based in the UK;
Has been negatively affected by coronavirus; and
Was not an ‘undertaking in difficulty’ on 31 December 2019.

There are certain exceptions such as if a business is already claiming funding under CBILS they cannot apply. However, if a business has already received a loan of up to £50,000 under CBILS and would like to transfer it into the Bounce Back Loan scheme, they can arrange this with their lender until 4 November 2020.

CBILS
There is no fee for companies to access the scheme. The government will make a Business Interruption Payment to cover the first 12 months of interest payments and any lender-levied fees. There will therefore be no upfront fees payable by the business and repayments will be interest free for the first 12 months, subject to certain exclusions. Repayment profiles and interest rates following the first 12 months will be set by each lender.

Personal guarantees may not be taken for facilities under £250,000 but may be taken for facilities above this; however, security may never be taken over a guarantor’s principal private residence.

The borrower remains at all times liable to the lender for the debt.

CCFF
Commercial paper is an unsecured short-term debt instrument generally issued by large companies to meet short-term liabilities. Under the CCFF, the BoE will purchase this paper from eligible companies to provide emergency cash flow. Those companies will commit to redeeming the paper when due. The transaction is unsecured, which is why it is only available to companies with a robust credit rating.

Financing will be offered on terms comparable to those prevailing in markets in the period before the pandemic.

For primary market purchases, the BoE will purchase securities at a spread above a reference rate, based on the current sterling overnight index swap rate. For secondary market purchases, the Bank will purchase commercial paper at the lower of amortised cost from the issue price and the price as given by the method used for primary market purchases. The Bank will apply an additional small fee (currently set at 5 basis points and subject to review) for use of the secondary facility, payable separately.

BoE will only purchase commercial paper with standard features issued using the International Capital Markets Association market standard documentation or simplified versions of these documents, which are now available on the BoE website.

CLBILS
Under the scheme, no personal guarantees will be permitted for facilities under £250,000. For facilities of £250,000 and over, claims on personal guarantees applied to the scheme facility cannot exceed 20% of losses on the scheme facility after all other recoveries have been applied.

The borrower remains fully liable for the repayment of any facility supported by CLBILS.

Future Fund scheme
The government is providing a total of £250 million of funding under this scheme, to be matched by £250 million sourced from private investors. As noted, the funding will take the form of convertible loans, which will automatically convert into equity on the company’s next qualifying funding round (at a discounted rate).

Bounce Back Loan Scheme
We await further details. Current details are that the government will guarantee 100% of the loan and there won’t be any fees or interest to pay for the first 12 months. The scheme will be delivered through a network of accredited lenders.

The European Commission has published (and amended) a Temporary Framework for State aid measures to enable Member States to provide financial support to businesses affected by the coronavirus crisis without breaching the State aid rules. More detail on the original framework is available here, and on the amendments here. The Commission is working on a third version of the Temporary Framework to further extend the scope of the Temporary Framework by enabling Member States to provide recapitalisations to companies in need. The draft is currently under the review of Member States.

This emergency framework enables Member States to provide direct assistance to companies during the coronavirus outbreak, relying on exceptional EU treaty provisions that enable the Commission to approve national support measures “to remedy a serious disturbance to the economy of a Member State”. National aid measures that comply with the Temporary Framework will, in principle, be approved by the Commission. The State aid rules (and therefore the Temporary Framework) continue to apply to the UK during the Brexit transition period.

So far, the Temporary Framework covers the types of aid listed below, which are aimed at:

· helping companies facing a sudden shortage or unavailability of liquidity due to the coronavirus;

· sustaining research and development, and production of products to help against the coronavirus crisis; and

· helping workers and preventing lay-offs.

Direct grants, repayable advances or tax advantages

Aid can be granted in the form of direct grants, tax and payment advantages, or other forms such as repayable advances, guarantees, loans and equity to companies facing sudden shortage or unavailability of liquidity. The aid can be granted if certain conditions are fulfilled, including that the overall aid does not exceed €800 000 per company and the aid is granted before 31 December 2020. Companies that were already in financial difficulty on 31 December 2019 cannot benefit from this type of aid.

State guarantees on loans and subsidised interest rates for loans

In order to ensure access to liquidity for companies facing a sudden shortage, public guarantees on loans for limited periods and amounts can be granted, provided that certain conditions are fulfilled, such as: the guarantee premiums are set at the level indicated in the Temporary Framework; and the guarantee is limited to six years and is granted before 31 December 2020.

Guarantees and loans channelled through credit institutions or other financial institutions

Member States will also be able to channel aid through the banking sector, with such aid being regarded as direct aid to the banks’ customers, rather than to the banks themselves. The Temporary Framework gives guidance on how to minimise any undue residual aid to banks and to ensure the funding is passed on, to the largest extent possible, to the final beneficiaries.

Short-term export credit insurance

The Temporary Framework foresees that, due to the current outbreak, marketable risks cover under export credit insurance is temporarily unavailable for all currently marketable risk countries.

COVID-19-relevant research and development (R&D); testing and upscaling infrastructures and production of COVID-19-relevant products

Aid can be granted in relation, broadly speaking, to , products and research necessary to help with the coronavirus crisis, namely:

R&D projects carrying out coronavirus and other antiviral relevant research;
construction or upgrade of infrastructure required to test and upscale products relating to the coronavirus crisis; and
production of products relating to the coronavirus crisis.

These forms of aid can be granted if certain conditions are met, including that:

the aid is granted in the form of direct grants repayable advances or tax advantages;
it is granted before 31 December 2020;
the R&D and construction/upgrade projects have an “incentive effect”, where the funding will accelerate or widen the project;
the aid beneficiary commits to grant non-exclusive licences under non-discriminatory market conditions; and
the aid cannot be granted to companies that were already in financial difficulty on 31 December 2019.

Tax deferrals and/or suspensions of employees’ social security contributions

Deferrals of payment of taxes and/or of social security contributions may be a valuable tool to reduce the liquidity constraints of companies. This type of aid can take the form of deferral of payments due in instalments, easier access to tax debt payment plans and of the granting of interest free periods, suspension of tax debt recovery, and expedited tax refunds. It can be granted to companies (including self-employed individuals) particularly affected by the coronavirus crisis, for example in specific sectors, regions or to companies of a certain size. The aid shall be granted before 31 December 2020 and the end of the deferral shall not be later than 31 December 2022.

Wage subsidies for employees to avoid lay-offs during the COVID-19 outbreak

In order to preserve employment, Member States may envisage contributing to the wage costs of companies (including self-employed individuals), which, due to the coronavirus crisis, would otherwise lay off personnel. This type of aid can be granted if certain conditions are met, such as:

the aid is in the form of schemes to companies in specific sectors, regions or companies of a certain size that are particularly affected by the coronavirus outbreak;
the wage subsidy is granted for a period of no more than 12 months; and
the monthly wage subsidy shall not exceed 80% of the monthly gross salary.

Jobs Support Scheme
Under the JSS, the Government will fund a percentage of the first S$4,600 of gross monthly wages paid to each local employee for nine months. The first pay-out under this scheme was made to 140,000 employers on 15 April 2020.

There are three levels of support for employers in different sectors:

Aviation and tourism. The JSS scheme will fund 75% of the first $4,600 of gross monthly wages per local employee;
Food services. The JSS scheme will fund 50% of the first $4,600 of gross monthly wages per local employee; and
All other sectors. The JSS scheme will fund 25% of the first $4,600 of gross monthly wages per local employee.

In addition, on 21 April 2020, the government announced an enhancement to the JSS. With the temporary enhancements to the JSS scheme, the JSS payout for the month of April 2020 and May 2020 were raised to provide a 75% wage support to all businesses in respect of wages paid in April 2020 and May 2020. The wage support for the other months will remain unchanged. The temporary enhancements were to be disbursed in April 2020 and May 2020 for the respective month which the wages are paid.

The Government has also extended the JSS payout, to cover wages of employees of a company who are also shareholders and directors of the company. This support will only apply to companies that were registered on or before 20 April 2020, and for the wages of shareholder-directors with Assessable Income of S$100,000 or less for Year of Assessment 2019. The May 2020 and subsequent JSS payouts will include support for qualifying shareholder-directors. The May 2020 payout will also include back-payment for companies with qualifying shareholder-directors whose wages were excluded from the first JSS payout in April 2020.

Similar to the arrangement above, the May 2020 wage top-up will first be computed based on wages paid in November 2019. Subsequent JSS payouts will be adjusted to account for actual wages paid in May 2020 compared to November 2019.

Self-employed persons Income Relief Scheme
The SIRS scheme which gives eligible self-employed persons (SEPs) $1,000 monthly for 9 months. To qualify, SEPs must:

Have started work as an SEP on or before 25 Mar 2020;
Earn a net trade income of not more than S$100,000;
Have no employment income, or in the case of dual status SEPs, income earned as an employee must not be more than S$2,300 per month (for married Singapore SEPs to qualify, the assessable income of the spouse must be S$70,000 or less);
Live in a property with annual value not more than S$21,000; and
Not own two or more properties (for married Singapore SEPs to qualify, the SEP and spouse together must not own two or more properties).

Temporary measures scheme
New legislation has provided for temporary measures which effectively suspend contractual obligations in certain categories of contracts. Contracts and parties affected by this bill include:

leases or licences for non-residential immovable property (e.g. a lease for factory premises)
construction contracts or supply contracts (e.g. for the supply of building materials);
loan facilities granted by a bank or finance company to SMEs (turnover of not more than S$100 million) where loans are fully or partially secured against commercial or industrial immovable property, plant, machinery or other equipment used for business purposes in Singapore;
contracts for provision of goods and services (e.g. venues and catering);
certain contracts for goods or services for visitors to Singapore, domestic tourists or outbound tourists or promotion of tourism; and
certain hire purchase agreements (for example, commercial vehicles).

MAS COVID-19 support scheme
Financial institutions (with less than 200 employees) and fintech companies (certified by the Singapore Fintech Association) will qualify for the Digital Acceleration Grant of up to 80% co-funding from MAS, which has two tracks:

Industry Pilot. A joint project involving at least three eligible participating entities may apply for funding support of S$100,000 per entity per project, capped at two years from implementation;
Institution Project. An eligible participating entity may apply for funding support of S$120,000 capped at one year.

The Digital Accelerator Grant and COVID-19 Support Scheme are an extension and enhancement of the Financial Sector Technology and Innovation scheme (FSTI) which was due to expire in June 2020. The extended and enhanced scheme is due to end on 31 December 2021 and will be reduced to 70% co-funding from 1 January 2022.

Contacts:
Marie Canivet, Partner, Belgium T +32 2 515 9376 marie.canivet@osborneclarke.com	Olivier Lambillon, Counsel, Belgium T +32 2 515 93 34 olivier.lambillon@osborneclarke.com
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Contacts:
Catherine Olive, Co-Managing Partner, France T +33 1 84 82 45 32 catherine.olive@osborneclarke.com	Sophie Jouniaux, Partner, France T +33 1 84 8 24594 sophie.jouniaux@osborneclarke.com
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Contacts:
Joachim Breithaupt, Partner, Germany T +49 221 5108 4056 joachim.breithaupt@osborneclarke.com	Florian Merkle, Senior Associate, Germany T +49 221 5108 4320 florian.merkle@osborneclarke.com
Antje Günther, Partner, Germany T +49 221 5108 4218 antje.guenther@osborneclarke.com	Back to top

Contacts:
Andrea Pinto, Partner, Head of Banking & Finance, Italy T +39 02 5413 1723 andrea.pinto@osborneclarke.com	Stefano Guerreschi, Partner, Head of Tax, Italy T +39 030 2888 611 stefano.guerreschi@osborneclarke.com
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Contacts:
Peter van der Horst, Senior Associate, The Netherlands T +31 20 70 28656 peter.vanderhorst@osborneclarke.com	Axel Van der Staak, Head of Banking and Finance, The Netherlands T +31 20 7028648 axel.vanderstaak@osborneclarke.com
Aram Hovanesjan, Associate, The Netherlands T +31 20 70 28610 aram.hovanesjan@osborneclarke.com	Job van der Pol, Head of Tax, The Netherlands T +31 20 70 28920 job.vanderpol@osborneclarke.com
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