Supports for Startups During COVID-19 #2 — Germany, Greece, Estonia
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 second blog post of our “Supports for Startups During COVID-19” series. In this series you can find how different countries are helping startups during COVID-19 pandemic.
You can read the first blog post of the series here:
Germany
The German Government has issued a series of public support funding measures in the course of the Covid-19 crisis.
1. Emergency Aid for Small Businesses:
To ensure the liquidity of small companies, the German Government offers a one-off payment for up to €9,000 for companies with up to 5 employees and €15,000 for companies up to 10 employees. The exact amount depends on the liquidity needs of the company in question. These funds do not have to be repaid.
2. Liquidity Support by the KfW:
The German State-owned development bank Kreditanstalt für Wiederaufbau (the “KfW”) provides an unlimited amount of liquidity support to be available to all companies ranging from the smallest businesses to large DAX-listed multinational corporations. Accordingly, the following loan schemes are available:
-ERP Start-Up Loan — Universal
The loan scheme is only available to companies that have been on the market for less than 5 years and which have temporary financing difficulties due to the COVID-19 crisis.
-Loans with Accelerated Approval Process for Mid-Sized Enterprises: accelerated lending scheme for SMEs, under which loans may be provided with an accelerated approval process (“Schnellkredite”) to SMEs which:
- have more than 10 employees;
- have been active on the market since at least 1 January 2019;
- reported a profit for the 2019 financial year or on average over the last three financial years;
- did not experience any financial difficulties prior to 31 December 2019.
Under this scheme, KfW may grant a loan in an amount of up to three times the average monthly revenue generated by the SME in 2019 capped at €800,000 (for SMEs with more than 50 employees) or €500,000 (for SMEs with up to 50 employees).
The German federal budget guarantees KfW a financial framework of around €460 billion. If necessary, this framework can be increased promptly by up to €93 billion.
3. Specific Support Program for Startups:
The Federal Government has decided to invest around €2 billion in a joint fund by way of co-financing (the Corona Matching Facility), to expand venture capital financing so that financing rounds for promising innovative start-ups from Germany can continue to take place.
According to the Ministry of Finance, the following measures or ‘pillars’ will be implemented under this scheme:
- Strengthening venture capital investors at the fund level: VC funds may ‘match’ the public resources in a ratio of up to 70% to 30% of the aggregate funding, 1 provided that other private investors who do not benefit from the CMF also participate in the respective financing round. A start-up can receive a maximum of 50% of its funding from the CMF, per financing round. The VC funds (and not the start-ups) can apply for the CMF. The successful completion of a due diligence process is a prerequisite for making use of the CMF.
- Additional support for other start-ups/SMEs: The second pillar aims at supporting young start-ups and SMEs without access to the CMF, through collaboration with the Federal States. It is intended to provide venture capital through associations of the federal states or through state development institutes so that they can then pass on the funds to start-ups and small SMEs via their network.
Here is more info about the support of the German Government:
Greece
1. Loan Interest Subsidy
It covers interest on existing loans (e.g. business, bond, or current account loans) for a period of 3 months. An enterprise can be granted total support up to 800.000€.
2. Loan grant by Hellenic Development Bank
Loans amounting up to 50% of the annual turnover of the enterprises or up to 50% of the current year’s orders are generally granted. Slightly different thresholds apply in the case of start-ups. If the aforementioned numbers are not clear, the loan amount may not exceed 100% of the equity capital.
3. The Independent Public Revenue Office
The Independent Public Revenue Office proceeds with immediate repayment of all outstanding liabilities to citizens and businesses, refunding up to € 30,000 in all cases under review.
4. Tax Payments Discount
Affected enterprises can choose to either defer payment of tax debts up until 31 August 2020 or make the payment on time at a discount of 25% (only available for specific tax debts).
- A discount of 25% may be granted to financially affected enterprises if the debt installments/partial repayments due between 30 March 2020 and 30 April 2020 are paid on time.
- VAT and WHT debts are excluded from the 25% discount unless previously included in a debt installment/settlement payment scheme.
Here is more info about the support of the Greek Government:
Estonia
According to a survey conducted by Startup Estonia and Estonian Founders Society, which was responded by 100 Estonian startups (85% of the respondents are in the idea-, seed- or starting phase entrepreneurs):
29% of the respondents have a runway for up to five months, 21%, however, have a runway for only up to two months. Startups have cut costs (65%), decreased salaries (34%) and had to lay people off (19%). Although 36% of startups see opportunities to grow their businesses in the crisis, more than half of startups (63%) are ready to make even bigger cutbacks and lay people off, if the crisis will last longer than until the end of April. 24% of startups are planning to lay people off and 15% of those are most likely to be forced to lay 30–50% people off. 18% of respondents are in the phase of fundraising and are facing cancellations of the deals by investors. Another 22% of startups planned to start fundraising this spring.
1. €35 Million Aid by Ministry of Economic Affairs
The Estonian government approved a €25 million aid package for the tourism sector and the allocation of €10 million to support micro and small enterprises. The crisis measure package totaling €35 million was developed by the Ministry of Economic Affairs and Communications and Enterprise Estonia (EAS).
The amount of support per company ranges from 2,000 to 60,000 Euros, depending on the company’s field of activity, size, loss of revenue, labor taxes paid to the state, and the need to survive the crisis period.
Through EAS, the ministry will also start offering direct support to micro and small enterprises, the aim of which is to provide one-time non-refundable aid to partially compensate for crisis damage caused by the COVID-19 outbreak, which would help micro and small enterprises ensure their sustainability in the provision of products and services also after the end of the COVID-19 pandemic.
Both direct subsidies of EAS are one-off and one crisis support measure per undertaking can be applied for. The target group of companies eligible to apply for the support is large and the volume of the support budget is limited, thus, the support will be processed in the order the applications are received until the funds run out. Entrepreneurs can apply for direct subsidies through EAS.
For more information:
https://mkm.ee/en/news/government-approves-eu35-million-aid-package-entrepreneurs
2. Estonian Unemployment Insurance Fund — Temporary Subsidy Program
Temporary subsidies will be paid to those employees whose employers are significantly impacted by the current extraordinary circumstances. The subsidy will grant an income for the employees and help the employers to surpass temporary difficulties without having to lay off their staff or call bankruptcy.
The amount of the subsidy will be 70% of the average monthly wage of the employee. The maximum amount of the subsidy is €1000. In addition to that, the employer must pay a wage of at least €150 to the employee.
Are eligible:
- The employer must have suffered at least a 30% decline in turnover or revenue for the month they wish to be subsidized for, as compared to the same month last year.
- The employer is not able to provide at least 30 percent of their employees with work.
- The employer has cut the wages of at least 30% of employees by at least 30% or down to the minimum wage.
For more information: https://www.tootukassa.ee/eng/content/subsidies-and-benefits/temporary-subsidy-program
