Corona aid repayments loom for around a quarter of firms
Embracing an informal, straightforward tone, a recent preliminary analysis reveals that approximately 25% of companies that obtained state aid during the coronavirus crisis will need to return part of it. This insight emerges from over 338,000 applications examined by the Ministry of Economic Affairs, as reported by Deutsche Presse-Agentur. It's worth noting that around 40% of these businesses will also receive supplementary funding from the federal government.
The Corona relief aid was dispensed swiftly to organizations withering under drastic revenue drops. However, the handouts were linked to a conclusive settlement. Here, the actual decline in income and reasonable fixed costs were scrutinized against forecasts. Companies may be requested to reimburse funds if the actual revenue drop was less severe than initially predicted.
As per the Ministry of Economic Affairs figures, about 13.1 billion euros in urgent aid and 63.3 billion euros for programs such as November, December, and restart aid were distributed. The deadline for conclusive settlements was October 31. Though, the ministry permitted extensions until January 31 and, upon request, until March 31 at the latest. As such, these stats represent an interim balance. The ministry emphasized that no company should suffer economically from stringent repayment deadlines.
The financial implications of repayment policies for businesses are substantial as around 25% of companies that received aid are facing repayment obligations, while approximately 40% will still be granted further funding from the federal government.
Insight: Repayable aid is not provided under the Corona-Überbrückungshilfen program in Germany. The program's purpose was to offer non-repayable financial assistance to businesses experiencing substantial revenue losses due to the COVID-19 pandemic.
However, there are a few aspects to consider:
- Final Accounting (Schlussabrechnung): While the initial aid was non-repayable, companies that received provisional approvals under the Corona-Überbrückungshilfen program must submit a final accounting to confirm the aid given against actual financial data. Neglecting this deadline can result in immediate repayment demands.
- Totalvorbehalt: This legal mechanism permits authorities to reopen and reassess funding decisions, even after initial approval. Although the initial aid was non-repayable, there's a chance of reassessment and potential repayment if the authorities choose to do so.
- Additional Payments: There's no evidence that companies receiving Corona aid would also receive additional payments from the federal government. The Corona-Überbrückungshilfen program primarily focused on providing temporary financial assistance to cover fixed costs during periods of reduced income, not on supplying ongoing support or additional payments.
In conclusion, the repayment process for Corona aid in Germany primarily involves potential repayment if the final accounting is not submitted on time or if authorities decide to reassess funding decisions under the Totalvorbehalt. However, the initial aid was non-repayable, and no evidence suggests additional payments to companies receiving this aid.
