Überbeückungshilfe: all you need to know about stage 2 of Soforthilfe2
Updated: Aug 26, 2020
We talked a lot about Soforthilfe2, the governmental plan for supporting small businesses, freelancers and self employed people throughout the Corona-crisis.
Back in March, self employed people and small business owners could have applied for a combined grant (Zuschuss) of both governmental funds and local funds, in order to get through the next three months. The purpose of this support system was different in each state: in some, applicants could have used the funds for personal expenses such as health insurance and private rents, in others, applicants had to prove they have no reserves. Some states, such as Berlin, ran out of local funds very, very quickly.
Back at the end of March, the application (at least here in Berlin) was super easy. The funds were paid very very fast - in an almost - automatic process. The idea was to pay out first in order to help those who need the funds to survive, and to run an eligibility check at a later stage. The entire operation was meant to be fast and simple, "schnell und unbürokratisch". There was only one thing they did not cover yet: what will happen at the end of those three months?
(Bijo the dog and I, queueing for Soforthilfe2 at the end of March 2020)
With time, the government started discovering fraud cases: people who received the grants even though they did not have any small businesses, people who applied for them even though they did not meet the requirements, and so on. In a relatively new article, the federal government criticized Berlin for being too easy with the Soforthilfe2 funds: it was supposed to be "schnell und unbürokratisch" - in reality the funds were given to anyone who applied with no review or auditing mechanism.
However, the three months are over, but it seems like Corona is here to stay. Due to the end of quarantine and the (positive) change of regulations, many businesses can survive throughout this time. However, not everybody will survive. I already see how many small shops, cafes and restaurants in my surroundings are going out of business and how some of my colleagues are looking into finding a stable, secure job, whereas others who were thinking of self employment drop this idea and keep their secure day job.
In other words, the crisis is not over yet. Business owners are still struggling, so we need a solution for the meanwhile.
The solution the German government had found is called Überbrückungshilfe: this is the solution which is supposed to support business owners throughout the summer (June, July and August 2020). Unlike Soforthilfe2, which was meant to be uncomplicated, this one is going to be more complicated to get: It is less generous, the application process will be more complex, and most importantly - applications are to be submitted by tax professionals (probably in order to avoid abuse).
So, what is it going to be like?
Here are the main points:
How high is the grant?
Similarly to Soforthilfe2, the grant can be used only for fixed business costs, and the amount applied for should be calculated according to those costs.
Self employed people and small business owners with up to 5 employees may apply for up to 9.000 Euros.
Small business owners with up to 10 employees may apply for up to 15.000 Euros.
Unlike Soforthilfe2, it seems that this program is also designed for middle-sized companies and organizations, as the maximum amount one can apply for is 150.000 Euros.
Another difference to Soforthilfe2 is that small business owners may apply for higher grants in case their costs exceed the amount stated above. In those cases, the reasons for the higher amount application should be detailed in the application.
What can this grant be used for?
Same as with Soforthilfe2 - Bund, the Überbrückungshilfe may be used only for fixed business costs, such as rents (including utility costs), business loans, membership fees, business insurances and tax professional costs.
Who is eligible?
Same as with Soforthilfe2, applicants need to prove that they are in a financial crisis and that the reason for this crisis is Corona.
Unlike Soforthilfe2, this time the definitions for a "financial crisis" and for "the reason for it is corona" had been operationalized. In simple words:
In order to be eligible, one needs to prove that their revenues in the months April and May 2020 decreased in at least 60% in comparison to their income in the same months in 2019.
If a small business had a monthly revenue of 10.000 Euros in April and May 2019, they would have to prove a monthly revenue of max. 4.000 Euros in April and May 2020 in order to be eligible for the benefit (meaning a decrease of 60%).
Eligibility of recently founded businesses (Existenzgründung):
In order to be eligible, the business must be active in the market before 01.03.2020.
If a business had not existed in April and May 2019, they can use November and December 2019 as a point of comparison for their eligibility calculation.
How much is paid?
Unlike Soforthilfe 2, Überbrückungshilfe will not cover the total costs, but rather a certain share of it, which depends on the extent of the loss of income, which is determined in comparison to the same month in 2019:
Business owners who lost more than 40% of their revenues and less than 50% of it will receive a grant of 40% of their fixed costs.
Those who lost between 50% and 70% will receive a grant of 50% of their fixed costs.
And those who lost at least 70% of their revenues will receive a grant of 80% of their fixed costs.
Three more important issues:
1. In case the revenues will exceed 60% from those of last year, business owners will not be eligible for the funds anymore
2. Over-compensation must be paid back to the government. 3. The funds received from the government are to be filed as taxable income with the tax return of 2020.
What will the application process look like?
Applications can be submitted from the beginning of July and until the end of August and will have to be submitted by tax professionals.
We still do not know what the application will look like, but we do know that there will be two stages to it: In the first one, the tax professional will have to declare the losses for their client in a reliable manner, and in the second one - "real" proofs (such as BWA) will need to be submitted in order to make sure the applicant was eligible throughout the entire time and/ or to determine how many funds need to be paid back to the government.
Back in March, there were two grants one could have applied for: the governmental one (Bund) and the state one (Land). Is this going to be the same way now?
On June 26th, 2020, the senat of Berlin had announced the continuation of state-support given to self employed people, freelancers and smaller companies. The details of this support are still unknown, but they are talking about providing small businesses with a completing grant to the governmental one, which will cover up to 50% of commercial rents and support industries that were affected by the crisis most, such as the event industry, along with night-life, art, culture and tourism.
And what do you think about this means of support? Too little or just about right? I would love to hear your thought :)