30-04-2020
Businesses in difficulty due to the COVID-19 coronavirus crisis; measures and remedies
The coronavirus has great impact on our economy. While many companies are able to absorb short drops in turnover, in the long run things will become complicated. In this article we provide an overview of the most relevant measures taken by the Dutch government, updated up to and including 30 April 2020.
Government measures
Since 17 March, the government has come up with several measures to accommodate businesses. We will elaborate on these and other measures and tools that may help businesses out of a potentially awkward situation.
1. Temporary Emergency Bridging Measure to Preserve Employment (NOW)
Among the economic measures taken by the government is the repeal of the current Special Regulations for Reduction in Working Hours and its replacement with the Temporary Emergency Bridging Measure to Preserve Employment (NOW).
Companies which expect a loss in sales of at least 20% due to COVID-19 may apply to the Dutch Employee Insurance Agency UWV for a contribution towards their wage costs for a period of three months. This contribution applies to up to of 90% of the wage bill, depending on the loss in sales, and is significantly higher than the present benefit under the Unemployment Insurance Act (WW) of 70-75% of the maximum daily wage.
It has been possible to file applications with the UWV since 6 April.
Please click here for an elaborate explanation of the measures and its conditions.
2. Guaranteed Funding for Entrepreneurs Coronavirus Outbreak (“GO-C Scheme”)
The GO-C Scheme is a government measure that helps businesses with liquidity problems resulting from the corona crisis. This is a crisis measure in addition to the existing GO scheme, which was created during the economic crisis in 2009.
The GO-C Scheme makes it easier for companies to attract funds from banks, because the state gives the banks a guarantee for loans to companies for which that guarantee is applied for and granted. Banks may receive either an 80% (large businesses) or a 90% (small and medium-sized businesses) state guarantee. These percentages are much higher than in the existing GO scheme, which provides for a state guarantee of 50%. Loans starting from EUR 1.5 million up to a maximum of EUR 150 million can be guaranteed. Large companies are companies that employ 250 persons or more, and have an annual turnover of more than EUR 50 million and/or a balance sheet total of more than EUR 43 million.
Several conditions are attached to applications for these state guarantees. These are the following:
- The company applying must be a Dutch company with substantial activities in the Netherlands;
- It must be essentially healthy;
- It must have satisfactory profitability and continuity prospects;
- Only fresh money;
- No excessive withdrawal of capital within the last 12 months;
- GO-C for funding of liquidity deficits as a result of the corona crisis.
The actual funding is also subject to several requirements. For example, the term of the loan can be 6 years maximum, and it cannot be more than 25% of the borrower's turnover in 2019.
The scheme is not intended for the real estate sector (excluding brokerage), the financial sector (in this case: banks, insurers, investment companies or private equity companies), the health care sector and associations and foundations working solely in the field of public housing.
The participating banks are the following: ABN AMRO Bank, BNP Paribas, Deutsche Bank, ING, NIBC Bank, Rabobank, Triodos Bank. Applications under the Scheme may be submitted up to and including 15 December 2020.
3. Widened SME Credit Guarantee Scheme (“BMKB”)
The widening of the BMKB scheme was already on the political agenda, but was opened sooner (starting on 16 March 2020) because of the coronavirus. Via the BMKB scheme, the Ministry of Economic Affairs and Climate guarantees part of the credits to entrepreneurs. The scheme must make it possible for them to get funding from credit providers when they themselves cannot offer sufficient securities. The scheme is intended for bridging credits and for raising existing overdraft facilities.
Prior to the widening of the BMKB scheme, the credit guarantee of the government was 50% of the credit provided by a financier (the guarantee of the government being 90% of the credit guarantee). When the scheme was widened, this percentage was raised to 75%. As a direct result hereof, it becomes easier for credit providers to provide credits to these companies that are affected by the corona crisis. Enterprises are eligible for the BMKB scheme that have (i) fewer than 250 employees, and (ii) an annual turnover of 50 million Euro maximum or a balance sheet total of 43 million Euro maximum.
4. Relaxation of Postponement of Tax Payment
Entrepreneurs who are affected by the corona crisis can apply for a postponement of payment of their income tax, company tax, wage tax and turnover tax more easily. The Tax and Customs Administration will then immediately cease the tax collections. Any default penalties for late payment will not have to be paid either. The interest on overdue taxes that normally starts running on expiry of the tax deadline is also lowered, from 4% to nearly 0% (this goes for all tax debts). Finally, the tax interest rate goes down to 0% temporarily.
5. COVID-19 Compensation for Entrepreneurs in Affected Sectors
Finally, the government has announced a compensation for entrepreneurs who suffer direct losses as a result of the restrictive measures to contain the coronavirus. This compensation is meant for entrepreneurs in specific sectors, such as the catering industry, sports businesses, travel agencies and the retail sector. Aggrieved entrepreneurs may apply for a one-off compensation of EUR 4,000 to meet their fixed expenses.
For more information on these measures and other legal instruments that may be useful for your company or customers facing financial difficulties, please contact Eva Jagt or Bart de Man.
