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New help for companies

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The corona crisis does not want to end, and many companies are struggling to survive. The federal government wants to support companies in need with an equity grant. It can be requested from today.

“The corona situation is still serious. That is why our entrepreneurs still need our support,” said a spokeswoman for the Federal Ministry of Economics today. So that the difficult situation does not lead to an incalculable number of companies slipping into bankruptcy due to corona, the federal government has a new aid instrument on offer from today: the equity grant. A few days ago, Federal Minister of Economics Peter Altmaier said: The Corona crisis continues to hit many companies and employees hard. Some branches of the economy have been closed for more than six months: “We are making an additional offer of help to these companies and their employees. With a new equity grant, we are directly strengthening the substance of these companies and helping them through this difficult time.”

Who is eligible?

Starting today, companies can apply for the new grant with their initial application for Bridging Aid III. The Ministry of Economic Affairs announced that companies with a drop in sales of at least 50 percent in at least three months in the period from November 2020 to June 2021 are eligible. Companies that have already submitted an initial application for bridging aid III can apply for the new equity grant with an amendment from the end of April. The grant is based on the amount that a company receives reimbursed for fixed costs from Bridging Aid III: These include rents and leases, interest expenses for loans, expenses for electricity and insurance. The grant is up to 40 percent of the amount that a company receives for the eligible fixed costs.

How else is help?

During the crisis, the federal government decided on comprehensive aid programs . The best-known instrument is likely to be the bridging aid. Bridging Aid III supports companies, self-employed persons and freelancers in all industries, it is “the central program of the federal government for companies with a significant corona-related decline in sales”. According to information from the Federal Ministry of Economics, around 3.1 billion euros had been paid out by April 13, which corresponds to 42 percent of the aid requested.

Extraordinary economic aid

The so-called extraordinary economic aid includes the November and December aid. The federal government is thus supporting companies, the self-employed and associations that will be affected by the closings from November 2, 2020 to combat the corona pandemic. Those affected receive a one-off subsidy of up to 75 percent of the respective sales in the corresponding months of the previous year for the duration of the closings in November or December. As far as the December aid is concerned, more than 5.1 billion euros have been paid out so far, that is 81 percent of the aid requested. In addition, there is the restart aid for the self-employed, other hardship aid as well as sureties and guarantees for larger companies, family businesses and medium-sized companies from the economic stabilization fund. In addition, KfW offers cheap loans for companies, self-employed and freelancers who have got into financial difficulties due to the Corona crisis.

Tax assistance is also granted

There are also tax aids and simplifications, which you can find out about on the website of the Federal Ministry of Finance. These include, among other things, the deferral of tax payments and easier adjustment of tax prepayments, extended deadlines for tax returns by members of the tax advisory professions. Finally, there are still improved options for depreciation for movable assets, tax-free subsidies from the employer for short-time work allowance, home office flat-rate and the permanent increase in the relief amount for single parents.

The mountain of debt is growing

The bulk of the offers of assistance cost the state budget dearly. According to a study by the employer-related Institute of the German Economy (IW), national debt is growing rapidly in the pandemic . The federal, state and local governments will pile up around 650 billion euros in new debt by 2022. The debt of the German state will grow to a total of 2.7 trillion euros by then, it is said. The economic experts propose not to reduce debt too quickly, so that the state has leeway for investments in infrastructure, for example, and not too many billions flow exclusively into debt reduction.

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