As Europe has been massively hit due to the coronavirus pandemic, people are asked to stay at home to keep themselves safe. The ‘stay safe’ message is being repeatedly shared across communities. Worsening the condition, the COVID-19 pandemic spreads across 80% of the global countries killing several thousands of people.
While the virus outbreak has undoubtedly left an impact on several industries and big businesses such as Booking.com, Amazon, etc., it has not spared the startups. Given that there is a ‘State of Emergency’ in some countries, others across Europe are expecting the same to be announced. And, this has adversely impacted the startups with many entrepreneurs wondering how to go about with debt, cash, and employees.
Already, we saw that PE and VC fundraising of tech startups has been affected due to COVID-19. Besides fundraising, day-to-day costs as well as cashflow are also becoming major concerns for startup founders.
To resolve the challenges faced by startups, the governments across Europe have unveiled measures that will address the concerns of small and medium-sized businesses that are not being able to pay their debt, running out of cash, and have idle staff. Here we have a list of government-supported resources for startups affected by coronavirus to cope up with their businesses in various European countries and the UK.
The Netherlands Chamber of Commerce has come up with a set of FAQs for entrepreneurs and a roadmap that will be useful for companies. The cabinet aims to protect the income and jobs in addition to minimising the consequences of the COVID-19 faced by self-employed professionals, large companies and SME entrepreneurs. It provides them with billions of euros that can support them every month until they recover. With these measures, the government ensures that companies can continue paying their staff, allow for money to remain in companies throughout relaxed tax regimes, compensation, additional credit facilities, and bridge the gap for self-employed professionals.
The French government has announced several measures for startups as revealed by La French Tech’s coronavirus guide. It has pushed social charges and tax payments that were due in March so that companies can request to postpone these payments. If customers owe you money, then you can seek a mediator to help in recovering the funds. If the loan insurance fees and debt payments can’t be made on time, then you can ask for a state-backed credit mediator to help convince your bank.
Also, there are temporary unemployment measures that will be extended to all companies letting them cut back employees’ hours without direct layoffs. In a recent development, the French Ministry of State for Digital Affairs Cédric O and Bpifrance, a public investment bank announced a comprehensive support plan of €4 billion targeted at startups. With this, the French government wants to bridge the gap between refinancing and liquidity measures temporarily.
The German government has pledged unlimited liquidity assistance to companies in need of cash and the same is arranged as loans from KfW. Also, companies can request to postpone tax payments. The country voted in a law expanding its work scheme dubbed Kurzabeit. This lets companies that implement reduced hours for employees get state support and lets them think about an alternative to layoffs. There are plans to modify bankruptcy rules or suspend them for some months so that companies get more tolerance when it comes to filing for bankruptcy. These have been sourced from Bundesverband Deutsche Startups’s roundup on coronavirus.
The UK government has taken measures so that small companies that cannot afford to pay their taxes can ask HM Revenue and Customs for an agreement that will suspend debt collection. Also, the interest of 3.5% on deferred tax payments will also be waived for startups. Businesses that are adversely affected by the COVID-19 pandemic will be let to underwrite loans and it will be delivered by the British Business Bank.
Small companies can reclaim the cost of 14 days of sick pay under £200 per employee, but it might take months for reimbursement as it is yet to set up the mechanism for repayment. Small businesses across the UK will be able to seek grants worth £10,000. It also announced loans to support businesses with an initial guarantee of £330 billion.
As per the Barcelona Tech City’s page on coronavirus, the Spanish government has deferred tax payments for both SMEs and self-employed but to avail this facility, companies should follow the instructions mandated by the Spanish Tax Agency. Payments towards loans granted by the General Secretariat for Industry can be postponed, and Instituto de Credito Official, a state-backed lender has given additional means to hand out loans to freelancers and companies in the adversely affected industries such as transport and tourism.
In Ireland, Revenue Commissioners are open for discussions to postpone tax payments for businesses affected by coronavirus, notes Scale Ireland’s list of go-tos. There are reduced work hours for employees and the government is planning to refund employers that pay at least partial salaries during this period. Some startups can get support for loans up to €1 million and there are restructuring and rescue scheme packages for vulnerable and viable firms that want to transform their business. Self-employed professionals who have lost business due to this virus outbreak can get a flat rate pay of €203 per week for a period of six weeks.
Italy is one of the worst hit nations by coronavirus. And, the Italian startup association Italia StartUP’s SOS page notes that companies have been asked to suspend tax payments while those earning under €2 million need not pay taxes at all. There is liquidity assistance for small and medium-sized companies by Cassa Depositi e Prestiti SpA, a state lender and a state guarantee of up to €5 million.
The Italian government has announced mortgage suspension measures that are in line with banks and self-employed workers can request to extend or suspend mortgage payments and long-term loans. The government has assured to take more measures including support for investment and part of the stimulus package is meant for layoffs and retaining some income for people who are out of work.
In Portugal, the government has announced measures such as the extension of tax payment deadlines, €60 million for micro-enterprises operating in the tourism industry, €200 million credit line to support the treasure needs of companies, support to maintain employment contracts by making the most of the cost of an employee’s salary even if the person is inactive so that employers can keep an eye on budgets, a special budget to let people who are out of a job to avail training, and postponed payments from self-employed people. During the coronavirus crisis, the Portuguese entrepreneurs have created the tech4COVID19 movement to fix issues.
The Swedish Ministry of Finance provides sick pay responsibility for two months. Also, it lets companies postpone payment of social security contributions, value-added tax forx, and preliminary tax on salaries for up to 12 months. Those companies that have paid tax for 2020 can get back the amount they paid from the Swedish Tax Agency. Depending on the case, the Swedish government will cover three quarters of costs as the working hours of staff have been reduced and they are out of work temporarily. Companies can get up to SEK 500 billion via banks to safeguard credit supply.
The Austrian government has deferred tax payments, allocated special loans for companies in the tourism sector, direct loans for companies that are impacted due to COVID-19, and more.
The Icelandic government has announced that it will take on up to 75% of salaries, deferred tax payments, financial support for companies in the tourism sector, refund of VAT for construction projects, and more.
The Denmark government has announced that employers will get reimbursements for wages and sickness benefits availed by sick employees. Companies can reduce the work hours of employees temporarily and avail compensation for a part of their pay so that they can avoid firings. Furthermore, employees can avail supplementary unemployment benefits as well. There is a special budget for companies dealing with potential large-scale firings. Here are some FAQs that you might find useful.
Stock photo from Daniel Jedzura/Shutterstock
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