Bridging aid for small and medium-sized companies

On June 12, 2020, the federal government decided not only to get the second Corona Tax Aid Act off the ground, but also the "bridging aid for small and medium-sized companies", which is to be paid as a non-repayable subsidy. Waagemann + Partner have summarized the most important information here.

Eligibility to apply on the merits

• small and medium-sized companies,
• Solo self-employed in the main occupation as well
• Full-time freelancers and
• organizations in all sectors.

Non-profit companies and organizations are also eligible to apply, regardless of their legal form, if they are permanently economically active on the market. Public companies are excluded from funding, with the exception of certain educational institutions.

Companies that qualify for the Economic Stabilization Fund are not eligible to apply . Companies that have received rescue aid or restructuring aid may be excluded from support. This depends on the type and timing of the funding.

Companies founded after October 31, 2019 are not eligible to apply.

Eligibility to apply, requirements:
Decline in sales April and May 2020
The requirement for funding is that the person entitled to apply has had to cease all or a significant part of their business activities as a result of the Corona crisis.

This is fulfilled if sales in the months of April and May 2020 together have collapsed by at least 60% compared to April and May 2019. For companies founded after April 2019, the months of November and December 2019 should be used for comparison instead of April and May 2019. In the case of non-profit companies, all income (including donations and membership fees) must be taken into account.

BUT: The company must not already have been in difficulty on December 31, 2019.

Determine the funding rate by estimating sales June - August 2020

The support is provided by reimbursement of the company's fixed costs. It is calculated separately for each month (June, July, August). The amount of the bridging aid depends on the extent of the drop in sales in the funding period (June-August) compared to the same month in the previous year. Therefore, a forecast must first be made for each month of how high the decline in sales will be. The amount of the drop in sales determines the amount of the fixed costs that are reimbursed:

If the turnover in one of the three sponsorship months is more than 60 percent of the turnover in the same month of the previous year, the bridging aid is not paid proportionately for the respective sponsorship month.

Basis of assessment: Eligible fixed costs
Certain fixed costs, which are explained in more detail in the appendix to this information sheet, are eligible for funding. They must have been justified before March 1st, 2020.

• The maximum funding is 150,000 euros for three months.
• For companies with up to five employees, the maximum reimbursement amount is 9,000 euros for three months.
• For companies with up to ten employees, the maximum reimbursement amount is 15,000 euros for three months.
• In justified exceptional cases - small companies with very high fixed costs - these maximum amounts can be exceeded.
• Affiliated companies or those that are directly or indirectly under the influence of the same person or company can only apply for aid up to a total of 150,000 euros for three months.

The practical implementation of the granting of the bridging aid is to start on July 10, 2020 with a digital, two-stage application process in the responsibility of the federal states and by the tax consultant or the auditor.

Level 1 : Credible proof of the application requirements and the reimbursable fixed costs,
Level 2: Subsequent proof - after the end of the program, a target/actual calculation takes place. If the actual sales deviate from the forecast, overpaid subsidies must be repaid or subsequently increased.

The application deadlines are no later than August 31, 2020 and the payment deadlines are November 30, 2020. Applications can only be submitted online and there will be a portal solution at the federal level, which will enable country-specific adjustments/paths if necessary. The final invoice with the final sales and the final fixed costs can also be made after the end of the program (at the latest in the first quarter of 2021).

Attachment

Eligible Costs

Eligible for funding are ongoing fixed costs incurred during the funding period that are contractually based or officially determined and cannot be unilaterally changed according to the following list, which also takes industry-specific features into account:

1. Rents and leases for buildings, land and premises that are directly related to the company's business activities. Private room costs are not eligible.
2. Other rental costs
3. Interest expense on credits and loans
4. Financing cost portion of leasing installments
5. Expenditure for necessary upkeep, maintenance or storage of fixed assets and rented assets, including IT
6. Expenses for electricity, water, heating, cleaning and hygiene measures
7. property taxes
8. Operating License Fees
9. Insurance, subscriptions and other fixed expenses
10. Costs for tax consultants or auditors that are incurred when applying for the Corona bridging aid
11. costs for trainees
12. Personnel expenses during the funding period that are not covered by short-time work benefits are funded at a flat rate of 10% of the fixed costs in numbers 1 to 10. Living expenses or an entrepreneur's salary are not eligible.
13. In order to adequately take into account the special impact on travel agencies, commissions that travel agency owners have paid back to tour operators due to corona-related cancellations are also equated with the fixed costs according to Nos. 1 to 12.

The fixed costs of items 1 to 9 must have been justified before March 1, 2020. Payments for fixed costs made to associated companies or to companies owned or controlled directly or indirectly by the same person or company are not eligible.