Bridging Assistance: Bridging Assistance Phase 2
According to a notice from the BMWi, small and medium-sized enterprises (SMEs) as well as solo self-employed individuals and freelancers who are particularly affected by revenue losses due to government measures to combat the pandemic can now apply for additional bridging assistance via the nationwide portal www.ueberbrueckungshilfeunternehmen.de. As with the assistance in the first phase, it is granted as a subsidy toward operational fixed costs — albeit with several improvements to the application requirements.
As with Bridging Assistance I, applicants for Bridging Assistance II must also document their revenue losses and ongoing fixed costs as part of the digital application process. However, the thresholds for revenue losses have been lowered further from the previous 60 %:
Companies are now eligible to apply if they have revenue losses
➢ of at least 50 % in two consecutive months in the period from April to August 2020 compared with the respective prior-year months, or
➢ of at least 30 % on average in the months of April to August 2020 compared with the corresponding prior-year period.
A maximum of EUR 50,000 per month is reimbursed, and the subsidy toward monthly operational fixed costs has been increased:
➢ 90 % (previously 80 %) of fixed costs in the case of a revenue decline of more than 70 %;
➢ 60 % (previously 50 %) of fixed costs in the case of a revenue decline between 50 % and 70 %; and
➢ 40 % of fixed costs in the case of a revenue decline of more than 30 % (previously more than 40 % compared with the prior-year month).
In addition, the threshold under which SMEs with up to 5 employees could receive a maximum of EUR 9,000 and SMEs with up to 10 employees a maximum of EUR 15,000 has been removed without replacement, and the lump-sum allowance for personnel costs has been increased from 10 % to 20 % of eligible costs. Finally, in the final settlement, not only reclaims but also additional payments are to be possible in future.
The application deadline runs until 31 January 2021. As was already the case in the first phase of bridging assistance, applications must be submitted by a registered advisor. We are registered as Steuerberater (German Certified Tax Advisor) and are able to submit such applications. Please contact us if needed.
Details:
https://www.ueberbrueckungshilfe-unternehmen.de/UBH/Navigation/DE/Home/home.html
Support Measures (= Extraordinary Economic Assistance) for Temporary Business Closures:
The Federal Government has pledged to continue supporting businesses that had to close from 2 November onwards (and other affected businesses under certain conditions) in order to facilitate their continued existence. The extraordinary economic assistance for November 2020 is thus intended to provide further key support for companies, businesses, self-employed individuals, associations and institutions that are particularly affected by the current coronavirus restrictions.
Further details and conditions of the assistance have now been finalised; advance payments are to be made as quickly as possible, ideally by the end of November 2020.
The following framework applies to the extraordinary economic assistance:
Total volume: The extraordinary economic assistance is expected to have a financial volume of approximately EUR 10 billion.
Eligibility to apply: Eligible applicants are companies, businesses, self-employed individuals, associations and institutions directly affected by the temporary closures, and indirectly affected companies under the following conditions:
Directly affected companies: All companies (including public ones), businesses, self-employed individuals, associations and institutions that had to cease operations on the basis of the closure ordinances issued by the federal states following the resolution of the federal and state governments of 28 October 2020. Hotels are considered directly affected companies.
Indirectly affected companies: All companies that demonstrably and regularly generate 80 percent of their revenues with companies directly affected by the closure measures.
Affiliated companies — i.e. companies with several subsidiaries or operating sites — are eligible to apply if more than 80 percent of the group's total revenue is attributable to directly or indirectly affected group companies. Up to 75 percent of the revenue of the affected group companies is reimbursed. This applies, for example, to a holding company that owns both restaurants (closed) and retail businesses (remaining open) — emergency assistance is paid here if the restaurants contribute more than 80 percent of the holding company's revenue.
What specific funding is available?
The November assistance grants subsidies per week of closure amounting to 75 percent of the average weekly revenue in November 2019, up to an upper limit of EUR 1 million, provided the company's existing state-aid scope permits this (EU Small Aid Regulation).
Subsidies exceeding EUR 1 million for November assistance still require notification and approval by the European Commission. The Federal Government is currently in intensive talks with the European Commission to obtain such approval for higher subsidies.
Solo self-employed individuals may use the average weekly revenue in 2019 as the reference revenue as an alternative to the weekly revenue in November 2019. For applicants who started their business after 31 October 2019, the average weekly revenue in October 2020 or the average weekly revenue since founding may be chosen as the reference revenue.
Offsetting of benefits received: Other state benefits paid for the November 2020 funding period will be offset. This applies in particular to benefits such as bridging assistance or short-time work compensation (Kurzarbeitergeld).
Offsetting of revenue generated in November: If revenue is generated in November despite the general closure, it will not be offset up to an amount of 25 percent of the reference revenue. To avoid overfunding of more than 100 percent of the reference revenue, revenue exceeding this amount will be offset accordingly.
A special rule applies to restaurants that offer takeaway meals. Here, the revenue reimbursement of 75 percent of the revenue in the 2019 comparison period is limited to those revenues subject to the full VAT rate, i.e. meals consumed in the restaurant. This means that revenues from takeaway sales — which are subject to the reduced VAT rate — are excluded. In return, these takeaway revenues during the closures are exempt from revenue offsetting in order to encourage the expansion of this business. Example: In November 2019, a pizzeria had EUR 8,000 in revenue from on-site dining and EUR 2,000 from takeaway. It therefore receives EUR 6,000 in November assistance (75 percent of EUR 8,000), i.e. initially somewhat less than other sectors (75 percent of the reference revenue). In return, in November 2020 the pizzeria can generate significantly more than the generally permitted EUR 2,500 (25 percent of EUR 10,000) in delivery revenue without a reduction in funding.
Application: Applications can be submitted in the coming weeks via the nationwide IT platform for bridging assistance (www.ueberbrueckungshilfe-unternehmen.de). Electronic applications must be submitted by a Steuerberater or Wirtschaftsprüfer (German Statutory Auditor). Payment is to be made via the bridging assistance platform by the federal states.
For solo self-employed individuals applying for no more than EUR 5,000 in funding, the obligation to submit the application through a reviewing third party does not apply. They will be directly eligible to apply, subject to special identification requirements.
Details = BMWi press release
KfW Quick Loan
At the same time, additional assistance is being made available to interested small companies through loan programmes of the Kreditanstalt für Wiederaufbau (KfW). The KfW Quick Loan has proven to be an important mainstay for the German Mittelstand during the coronavirus crisis. It is now also to be made available to solo self-employed individuals and companies with up to 10 employees. Through their house banks, companies can apply for these KfW Quick Loans in amounts of up to EUR 300,000, depending on the revenue generated in 2019. The federal government assumes the full risk and releases the house banks from liability. Furthermore, the bridging assistance is being extended for the period from January 2021 to June 2021 (= Bridging Assistance III) and the conditions are being improved. It is expected that some economic sectors will continue to face considerable restrictions on their business operations in the coming months. This concerns, for example, the cultural and events industry. The Federal Ministry of Finance and the Federal Ministry for Economic Affairs and Energy are working at full speed on the details.
We will, of course, continue to keep you up to date and wish all affected companies continued perseverance. Stay healthy.
Frequently asked questions
Frequently asked questions
Who is eligible to apply for Bridging Aid II?
Eligible applicants are small and medium-sized enterprises, solo self-employed individuals, and freelancers with revenue declines of at least 50% in two consecutive months between April and August 2020 compared to the same months of the previous year, or with an average revenue decline of at least 30% across these months compared to the prior-year period. The previous threshold of a 60% revenue decline has been lowered.
How high are the fixed-cost subsidies under Überbrückungshilfe II (Bridging Assistance II)?
Up to EUR 50,000 per month is reimbursed, staggered by revenue decline: 90% of fixed costs for a revenue decline of more than 70%, 60% for a decline between 50% and 70%, and 40% for a decline of more than 30%. The flat-rate allowance for personnel costs has been increased from 10% to 20% of eligible costs. The former caps for micro-enterprises with up to 5 or 10 employees have been abolished.
Until when can Bridging Aid II be applied for, and by whom?
The application deadline runs until 31 January 2021. Applications must be submitted via the portal www.ueberbrueckungshilfe-unternehmen.de by a registered examining third party, i.e. a Steuerberater (German Certified Tax Advisor), Wirtschaftsprüfer (German Statutory Auditor), or sworn auditor. In the final settlement, not only repayments but also additional payments will be possible in future.
Who is eligible to apply for the extraordinary November aid?
Eligible applicants include companies, businesses, self-employed individuals, associations, and institutions directly affected by the closure orders from 02.11.2020 onwards, including hotels. Indirectly affected are companies that demonstrably generate at least 80% of their revenue on a regular basis with directly affected companies. Affiliated companies are eligible if more than 80% of the group's total revenue is attributable to affected parts.
How is the November aid calculated and what special rule applies to restaurants?
The November aid provides 75% of the average weekly turnover from November 2019 per week of closure, capped at EUR 1 million (higher amounts require EU approval). For restaurants, reimbursement is limited to turnover at the full VAT rate (dine-in); in return, take-away sales are not counted against the subsidy. Other state benefits such as Überbrückungshilfe (bridging aid) or Kurzarbeitergeld (short-time work allowance) are offset against the aid.
What are the terms of the KfW quick loan for solo self-employed individuals and small businesses?
The KfW quick loan is also available to solo self-employed individuals and companies with up to 10 employees. Through the principal bank, up to EUR 300,000 can be applied for, depending on 2019 revenue. The federal government assumes the full risk and releases the principal banks from liability.