Tuesday, January 12, 2021
Displeasure over tough payment
November aid is paid out
The state pays billions every month to help companies and entrepreneurs affected by the lockdown. However, to the displeasure of the industries affected, the funds are flowing only slowly, and the calculations are complicated. At the beginning of the year, the federal government changed the modalities again.
Despair, frustration, existential fears – and anger at politics: This is how business associations describe the mood at many companies whose operations are closed due to the lockdown. There are billions of dollars in the state aid pots – but little has so far been received by those affected. There were delays in the payment of November aid, and there is a catch with bridging aid II. But now the good news: After technical problems, the payouts of the regular November aid by the federal states can start immediately. Installments have been flowing since the end of November – so far, according to the ministry, more than 1.3 billion euros.
There are also discounts for December aid. The system is the same: in principle, companies affected by closures and the self-employed receive subsidies of up to 75 percent of sales in the same month of the previous year.
With the reimbursement of lost sales, the federal government changed course at the end of October, because fixed operating costs are reimbursed for the bridging aid that runs in parallel – so that companies can continue to pay rent or interest on loans. This change of course has long been viewed as a mistake by some within the government. Among other things, because of the high costs – for November and December aid is expected to be 15 billion euros each – the federal government recently made it clear: the main instrument is the reimbursement of fixed costs. This also applies to bridging aid III for the funding months from January to the end of June.
The President of the Association of Family Entrepreneurs, Reinhold von Eben-Worlée, said that aid would arrive too late, not at all or in a disappointing amount. In addition, there is a "mess of communication". It turned out that, in addition to a drop in sales, the companies now also have to show a net loss.
The chief executive of the Federal Association of Liberal Professions, Peter Klotzki, said that a regulation restricting "uncovered fixed costs" in the calculation of the bridging aid had only been added later. "This means that quite a few applications are at least slipping into the gray area, and repayments are to be feared."
The President of the German Hotel and Restaurant Association, Guido Zöllick, said the companies had relied on the sales-oriented assistance to flow in full after deduction of the short-time allowance. "Instead, they are now experiencing that the aid is being paid very slowly and that it is not being paid in full because of crediting elsewhere."
The background to the criticism is, on the one hand, the delay in the payment of November aid. On the other hand, the provisions of Bridging Aid II were adapted in light of EU state aid law. According to the Ministry of Economic Affairs, "uncovered fixed costs" are a prerequisite for the granting of subsidies – that is, for costs that a company cannot cover with the income it still has.
A spokeswoman for the ministry pointed out that months of loss could be assumed for bridging aid II since the start of the corona pandemic in March 2020 – provided that a drop in sales of more than 30 percent was reported. Profit months would not have to be taken into account. The ministry assumes that the majority of firms that apply for aid have made losses.
The Ministry of Economic Affairs has long been unjustly pilloried by the criticism. In a very short time it was possible to implement the system of payments on account and to pay out the funds through the federal treasury – the federal states were unable to do so. Because, for example, short-time working allowance is deducted from the regular November benefits, it takes a while until all the information is available. Negotiations were also ongoing with the Commission on improvements to state aid law.
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