Corona hardship payments

In order to mitigate the economic consequences of the crisis, the federal government, together with the cantons, has provided hardship aid in addition to bridging loans.

Hardship aid: Support for particularly affected companies

Hardship aid is financial support granted to businesses that have found themselves in an existential emergency due to the coronavirus pandemic. These businesses had to meet certain criteria, such as a significant drop in turnover and a difficult liquidity situation.

À-fonds-perdu contributions: These are non-repayable cash contributions that Businesses could use to cover their running costs. The amount of the contributions depended on the size and loss of turnover of the Businesses.

Conditional profit sharing (bGB): It is a fully or partially refundable benefit that was paid out to Businesses with a turnover of over CHF 5 million. If Businesses made a profit in 2021, they must repay any hardship allowances received to this extent.

Bridge loans are liquidity assistance for SMEs that were provided unbureaucratically by the federal government in the first coronavirus wave in 2020 to enable businesses to cover their ongoing fixed costs despite a drop in turnover. These loans must be repaid.

Situation in the canton of Lucerne

In the canton of Lucerne, a total of around CHF 265 million in hardship allowances was paid out to over 1435 Businesses. Of this, 139 million francs went to 1360 Businesses with an annual turnover of less than five million francs. Apparently, Lucerne was the only canton to also apply the bGB to Businesses with a turnover of less than 5 million francs.

The reclaiming of the bGB has led to discussions in the canton of Lucerne. There has been criticism that the repayment conditions are too strict, could plunge companies into another liquidity crisis or may not be legal. As a result, the canton of Lucerne has commissioned a legal opinion to provide clarity. However, questions that remain contentious cannot be clarified without a court ruling, which is why so-called leading cases are being pursued, according to the press release from the canton of Lucerne dated February 26, 2024.

Latest communication from the Canton of Lucerne on how to proceed (July 2, 2024)

Important: Ban on use

If a company has been awarded hardship funds and/or a bridging loan during the coronavirus pandemic and these have not been repaid in full, the prohibition of use must still be observed (Art 3, Covid-19 Hardship Ordinance 2022: https://www.fedlex. admin.ch/eli/cc/2022/61/en):

• The bridging loan must be repaid in full before dividends (or similar cash outflows to the owners) are declared
.
• During the year in which hardship funds were received by the company and the three following years, no dividends (or similar cash outflows to the owners) may be declared.
  Example: A Businesses received CHF 50,000 in hardship funds on February 28, 2021 and did not have to make a repayment due to the bGB, as a loss resulted in 2021. This means that the company may only declare a dividend at the Annual General Meeting from March 1, 2025 at the earliest. If a dividend is declared before the end of the 3-year period, the hardship payments of CHF 50,000 received must be repaid in full.


Conclusion

The coronavirus hardship loans and bridging loans were an important source of support for many businesses in Switzerland. However, the repayment of the loans and the conditional profit sharing pose new challenges for some Businesses. Particularly with regard to the controversial bGB hardship allowances, it is advisable to lodge an objection within 20 days against a repayment order issued by the Canton of Lucerne as long as the legal situation has not been clarified politically or in court. Please note that the deadline cannot be extended.

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