Bridging aid extended until December

The bridging aid for companies particularly affected by the Corona crisis is entering a 2nd phase with lower eligibility requirements and higher funding limits.

Companies particularly affected by the Corona crisis have so far received further bridging assistance for the months of June to August after the emergency aid expired in May to safeguard their business existence. Even though this continuation of assistance for the economy was very well received in principle, the narrow eligibility requirements that companies have to meet for bridging assistance were criticized.

Many companies that had suffered significantly from the Corona crisis were nevertheless initially excluded from the claim as a result. The Ministry of Economics has made improvements in some details, but has not changed the essential rules. Only the application deadline for the bridging assistance has been extended by the federal government - initially until September 30, 2020, then until October 9, 2020.

In September, it was then also decided to extend the bridging assistance itself, which is accompanied by many changes to the eligibility requirements. This means that not only will significantly more companies now have the opportunity to apply for bridging assistance, but the funding itself will also be higher. This 2nd phase of the bridging assistance covers the funding months September to December 2020. Here is an overview of the points that have been changed for the 2nd phase:

• Access Threshold: One of the biggest criticisms of the first phase was the rigid access threshold, which mandatorily required a sales slump in the months of April and May compared to the same months in the previous year. This criticism is now addressed in Phase 2 by requiring either a sales slump of at least 50 % in two consecutive months in April through August 2020 compared to the same months in the previous year, or a sales slump of at least 30 % on average in April through August 2020 compared to the same period in the previous year, in order to qualify for bridging assistance.

• Capping: The cap for small businesses in the first phase of 9,000 euros for up to five employees or 15,000 euros for up to 10 employees will be removed without replacement for the 2nd phase. This means that the maximum subsidy is 50,000 euros per month, regardless of the size of the company.

• Funding Rates: In the 2nd phase, the individual level of support continues to depend on the extent of the sales slump. However, the subsidy rates are increased and the entry threshold is lowered in the lowest category. If the sales slump exceeds 70 %, 90 % of the fixed costs (in the 1st phase 80 % of the fixed costs) will now be reimbursed. If the drop in sales is between 50 % and 70 %, 60 % of fixed costs (in the 1st phase 50 % of fixed costs) will be reimbursed. For the lowest category, the reimbursement of 40 % of fixed costs is maintained, but this now already applies to a drop in sales of at least 30 % (in the 1st phase at least 40 % drop in sales).

• Personnel cost allowance: Personnel costs were taken into account in the 1st phase at a flat rate of 10 % of the remaining fixed costs. This lump sum for personnel costs will be doubled to 20 % in the 2nd phase.

• Final account: In addition to the application for bridging assistance, a final statement of account must also be submitted at a later date. If there are deviations from the forecasts in the application, in the second phase it will no longer only be possible to reclaim funds if the subsidy is too high, but also to make back payments if the subsidy is too low.

Applications for this 2nd phase can be submitted from mid-October. As before, the application for the company must be submitted by the tax advisor. It is important to note that the application deadline for the 1st phase of bridging assistance is October 9, 2020. It is not possible to apply retroactively for the 1st phase after October 9, 2020, nor to submit a joint application for both phases.