Supports for Startups During COVID-19 #1 — Australia, Romania, Portugal

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SUCool
Published in
7 min readJun 7, 2020

From the beginning of the COVID-19 pandemic, governments have started to seek ways to save the economy. As one of these ways, government-backed resources were established for startups which impacted by COVID-19, including grants, loans, and other measures.

This is the first blog post of our “Governments’ Supports for Startups During COVID-19” series. In this series, you can find how different countries are helping startups during the COVID-19 pandemic.

Australia

The Australian Government has announced measures to support businesses impacted by the COVID-19.

1. JobKeeper Payment

The JobKeeper Payment is available to eligible employers, businesses including companies, partnerships, trusts, and sole traders, not-for-profits, and charities. The Government will provide $1,500 per fortnight per eligible employee until 27 September 2020.

The intent of the JobKeeper Payment is to enable any eligible self-employed person to get a wage subsidy regardless of what business structure they use, where:

  • the business operates through a sole trader structure — one owner can be nominated to receive the JobKeeper Payment
  • the business operates through a partnership — one partner can be nominated to receive the JobKeeper Payment
  • the business operates through a company — one director can be nominated to receive the JobKeeper Payment
  • the business has shareholders who provide labor to the company and receive dividends in lieu of wages — one such shareholder can be nominated to receive the JobKeeper Payment
  • the business operates through a trust — one individual beneficiary (that is, not a corporate beneficiary) can be nominated to receive the JobKeeper Payment

2. SME Guarantee Scheme

The Coronavirus SME Guarantee Scheme will provide support for SMEs. Under the Scheme, the Government will provide a guarantee of 50% to small and medium enterprise (SME) lenders for new unsecured loans to be used for working capital. This will enhance these lenders’ willingness and ability to provide credit, which will result in SMEs being able to access additional funding to help support them through the upcoming months.

SMEs with a turnover of up to $50 million will be eligible to receive these loans.

The government will provide eligible lenders with a guarantee for loans with the following terms:

  • The maximum total size of loans of $250,000 per borrower.
  • The loans will be up to 3 years, with an initial 6 month repayment holiday.
  • The loans will be in the form of unsecured finance, meaning that borrowers will not have to provide an asset as security for the loan.

As part of the loan products available, the Government will encourage lenders to provide facilities to SMEs that only have to be drawn if needed by the SME. This will mean that the SME will only incur interest on the amount they drawdown. If they do not draw down any funds from the facility, no interest will be charged, but they will retain the flexibility to draw down in the future should they need to.

3. Quick and Efficient Access to Credit for Small Businesses

The government is providing an exemption from responsible lending obligations for lenders providing credit to existing small business customers. This exemption is for 6 months, and applies to any credit for business purposes, including:

  • new credit
  • credit limit increases
  • credit variations and restructures

Responsible lending obligations do not currently apply to lend which is predominantly for a business purpose, but it can take time and effort for lenders to be satisfied that the money borrowed meets this test. By providing a temporary exemption from responsible lending obligations, this reform will help small businesses get access to credit quickly and efficiently.

Here is more info about the support of the Australian Government:

Romania

“The Romanian Startup and Scaleup Tech Ecosystem Impact Report and COVID-19” identifies the effects generated by the spread of COVID-19 virus on the Romanian tech ecosystem. Based on responses of more than 100 founders of tech companies, the influence of COVID-19 on the activity of startup and scaleup companies is clear: 36.7% of the founders interviewed have already seen negative developments and changes in the business, and 40.4% estimate that they will have effects on the short and medium term development. The study shows that only 38.5% of the Romanian founders of startup tech companies will reduce the labor costs due to COVID-19.

1. Labor Cost

SMEs can declare “technical unemployment” for up to 75% of staff and ask for temporary unemployment support for the respective staff, at a maximum value of 75% of the national average brutto salary. The respective staff will have to be kept after technical unemployment for at least 6 months by the company.

2. Loan Payments

Loan payments can be postponed by SMEs for up to 3–6 months (depending on the respective bank)

3. Running Costs for EU Funded Startups

Startups funded through the Startup Plus ESF initiative may suspend their running employment contracts for up to 6 months while freezing the activity of the startups — reporting periods will be prolonged by up to 6 months.

Portugal

1. Startup RH COVID19

This is a program meant to help startups retain their talent and to prevent layoffs. This is an €8 million fund, that can help up to 10 employees per company.

This implies:

  • €635 wage for employees;
  • applicable to up to 10 employees;
  • beneficiaries can’t dismiss or layoff staff for the remainder of 2020;
  • registration in the Startup Hub or in an RNI incubator.

Companies eligible for Startup HR Covid19:

  • have been set up less than 5 years ago;
  • have no debts to the IRS or Social Security;
  • are not in a lay-off.

This fund can go up to €8M in support for startups and is managed by IAPMEI. The program is soon to be launched.

2. Startup Voucher Extension for 3 Months

Startup Voucher is one of the key initiatives for entrepreneurship promotion in Portugal. It aims to reduce the risks youngsters take by venturing and creating a company, by granting a scholarship of €700 per entrepreneur (up to 3 per project), incubation, and mentorship. Amidst the COVID-19 crisis, making sure these people can still hack and work in new products and solutions is of the utmost importance.

This implies:

  • extension for 3 more months of the Startup Voucher;
  • postponing of evaluations, and subsequently of the payment of completion prizes, for 3 months;
  • meant exclusively for people already benefiting from Startup Voucher.

This fund can go up to €300 thousand, having been designed for the current 75 projects benefiting from the Startup Voucher program.

3. Incubation Voucher COVID19

The Incubation Voucher is a program already created by the Portuguese government with the purpose of supporting startups to acquire incubation services, be it office space, mentorship, and other services provided by incubators and accelerators. Based on the original program, the government created its Covid19 counterpart, set to help startups acquiring these services.

This implies:

  • support of €1.500 per startup to be paid immediately;
  • beneficiaries can’t dismiss or layoff staff for the remainder of 2020;
  • registration in the Startup Hub.

Are eligible:

  • companies set up less than five years ago;
  • companies based in an incubator certified by RNI — National Network of Incubators.

This program can go up to 4M€, having in mind over 2500 startups based in Portugal.

4. Mezzanine Funding for Startups

Designed to protect startups who have benefited from investment, the Mezzanine fund will issue loan tickets of between €50k and €100k that can be converted into equity. It’s meant to ensure startups have cash flow and a strategic route to survive the ongoing crisis.

This implies:

  • beneficiaries can’t dismiss or layoff staff for the remainder of 2020;
  • registration in the Startup Hub;
  • submission of a report stating all the negative impacts of the pandemic in the business
  • beneficiaries must have benefited from a previous investment round (seed level included)
  • beneficiaries must have taken part in technology transfer processes;
  • have a mentor set for the next 12 months (cost included in the ticket)

Are eligible:

  • companies with between 1 and 8 years of operations;
  • companies with no debts to the IRS or Social Security.

This fund can go up to €10M and is managed Portugal Ventures. The program is soon to be launched.

Here is more info about the support of the Portuguese Government:

Here is a short summary of our blog post:

Governments’ Supports for Startups During COVID-19 #1 — Australia, Romania, Portugal

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