Corona pandemic bringing problems for companies

The Governing Council has decided to join the Federal Hardship Programme: CHF 44 million will be made available for companies that are severely affected by the pandemic.

Some people are being hit hard: the event, travel and tourism industries, as well as fairground showmen, are clearly feeling the effects of measures to curb the corona pandemic. The Zug Government Council (Regierungsrat) has now decided to participate in the Federal Hardship Programme (Härtefallprogramm). The federal government is providing CHF 200 million in total, with each canton receiving a proportional share. For Zug, this means specifically that the Confederation is making CHF 4.8 million available to the canton for companies who are struggling to survive economically. The condition, however, is that the canton contributes at least as much money.

The Government Council has voted in favour of this, and is therefore applying to the Cantonal Council (Kantonsrat) for a framework loan totalling CHF 44 million. Of this, CHF 40 million will be made available for loans, and CHF 4 million for fond perdu (non-repayable loans). "There was no question that the canton of Zug would not participate in this federal programme, especially as it is about securing the livelihoods of Zug companies that were profitable before the pandemic broke out," said Finance Director Heinz Tännler at Tuesday's press conference. These are difficult times - especially for SMEs and the catering industry.

40% reduction in annual sales
Who is considered to be a ‘hardship case’ and can fall back on this assistance? The prerequisite is that the company has recorded at least 40% less annual turnover than the average in previous years. The company must also have been profitable in the previous periods, and continue to be economically valuable in the medium term. So those who were already on the brink before the pandemic will not be able to slip in as freeloaders here. The entire capital and asset situation is thereby taken into account.

Hans Tannler at the press conference

In addition, those who received a loan in the first wave and have not yet fully exhausted it will not benefit from the new measures. The preservation of companies is paramount, emphasises the Governing Council. No company should have to close because of Corona, , says the Zug finance director. Needless to say, there are challenges to overcome, such as assessing whether a company is economically viable in the medium term. But Tännler was confident that he can cope with his skilled workers.

CHF 500,000 in emergency aid
A rapid implementation is important with regard to financial support. The Federal Government's hardship programme will be presented to the cantons as a white paper on 4th November, but it will also have to overcome hurdles in the canton of Zug once it enters into force. For example, the framework loan of CHF 44 million must go through two readings in the Cantonal Council. It is expected to take up to mid-February before the political processes are completed. But Heinz Tännler is convinced: "It's already too late for some companies." Some companies will already have had to lay off employees, and will no longer be able to pay the rent for their premises.

In order to bridge the period until mid-February, the canton has therefore decided to provide emergency aid. Thanks to the lottery fund, CHF 500,000 will be available for hardship cases from 1^st December. In order to process the hardship claims properly, a cantonal council decision is required, which will ideally be adopted before the end of 2020. If the cantonal council approves the government council's request for hardship measures, expenditure that has already been made will be charged to this framework loan, and will then be credited back to the lottery fund.

"In the canton of Zug, companies are basically on solid footing," says the government council. This was shown in the first wave. It therefore assumes that the CHF 500,000 will be enough for all those who are facing a real crisis. "But we keep an eye on the situation. Ultimately, it depends on various factors, and if we were to lock down again, everything would look different," said Tännler.