Luxembourg's Ministry of the Economy and the Ministry of Finance have confirmed that the Minister of Finance, Pierre Gramegna, and the Minister of the Economy, Franz Fayot, have welcome the adoption by the Chamber of Deputies on Thursday 20 May 2021, of the bill aimed at extending and modifying certain aspects of three economic aid schemes linked to COVID-19.
As a result, the regime of repayable advances and loans guaranteed by the Luxembourg state are extended until 31 December 2021. Also, the regime to stimulate investments during the COVID-19 era is also extended until the end of the year and the ceiling amount of aid per company rises to €1,800,000.
Minister Gramegna commented “I am very pleased that a large majority of MPs voted in favour of this bill. It extends and modifies three aid schemes which have proved their worth over the past few months, in that they have made it possible to best support our companies and their employees in the face of this pandemic and the economic consequences it entails."
Minister Fayot added “Companies will be able to continue to benefit from these three aid schemes in order to be able to better project themselves in the months to come. I am particularly pleased with the success of the aid scheme to stimulate sustainable investment, which shows the optimism of businesses about the future and demonstrates their desire to innovate and thus contribute to a more sustainable recovery of the economy."
1. The refundable advance scheme extended until the end of the year
The repayable advance is in the form of a capital advance to meet the liquidity needs of businesses that have experienced temporary financial hardship related to COVID-19. The advance can reach a maximum of €800,000 per company or group of companies, and can cover up to 50% of the eligible costs, namely staff costs and rents, for the months falling within the period of the unforeseeable event, under certain conditions and within certain limits. For the self-employed, income is assimilated to staff costs, subject to social security affiliation as self-employed.
Initially set for the end of June 2021, the deadline for obtaining a repayable advance is now extended until the end of 2021. In practice, companies will be able to submit their requests until the end of October at the latest for an award of advance end of December at the latest.
2,117 files granted a total amount of €162.2 million
Since the establishment of this regime and to date, a total of 2,117 reimbursable advance files have received a favourable opinion for a total amount of advances granted to companies of €162.2 million. The repayment of this advance is made according to a repayment plan which must be approved by the company and the Ministry of the Economy, and which begins no earlier than 12 months after obtaining the repayable advance.
In 2020, the Construction sector obtained the largest amount of subsidies (more than €30.5 million, or 22.3%). The closure of restaurants and bars since 26 November 2020 has strongly affected the activity of the Horeca sector which was granted nearly €9 million additional to deal with the crisis, which made the branch "Accommodation and restoration” the largest beneficiary of repayable advances.
2. State guaranteed loan regime extended until 31 December 2021
Set up as part of the economic stabilisation programme through an agreement signed between the Ministry of Finance and eight local banks, this scheme allows companies to take out a loan of up to 25% of their turnover. Loans are granted for a maximum of 6 years, with a state guarantee of 85%. In the event of default by the company, it is thus the State which undertakes to assume up to 85% of the amount of the loan. This scheme aims to facilitate the allocation of a bank loan to businesses through local banks.
While the deadline for submitting such a loan application was set for 30 June 2021, companies will finally be able to apply for a loan with such a guarantee until 30 December 2021.
382 loans granted for a total amount of €176.26 million
Since the establishment of this scheme and to date, out of a total of 415 requests received, 382 loans have been granted for a total amount of €176.26 million, 85% of which are subject to a State guarantee, for an amount of €150 million.
It is mainly businesses in the trade sector that have made the most use of this aid, with a nominal amount of loans granted to the tune of 60 million euros. The other sectors concerned are accommodation and catering with 25.9 million euros, manufacturing industry with 24.4 million euros, and construction, with more than 21 million euros in loans allocated. Note that to date, the state has not yet had to act as guarantor on an unpaid loan.
3. Extension and increase of the maximum aid ceiling to stimulate investment in the COVID-19 era
Set up in July 2020 in the context of the government programme "Neistart", this instrument aims to encourage companies to carry out, despite the investment climate currently deteriorated by the COVID-19 crisis, economic development projects, digitisation or environmental protection through financial aid of up to 50% of eligible costs. It is aimed at companies which suffered a significant drop in their turnover during the crisis and allows them to grant them much higher amounts of investment aid than in normal times, in particular for projects relating to the development of the circular economy.
Initially scheduled to expire on 30 June 2021, this investment aid scheme is also being extended until the end of the year. In practice, companies will be able to submit a case until the end of October at the latest, while the aid can be granted until the end of December 2021.
In addition to the extension, the ceiling amount of aid per company increases to €1,800,000 from the current €800,000, while the maximum aid intensity is maintained at a maximum of 50% of eligible costs.
219 aid requests for a total amount of €63.07 million
Since the establishment of this scheme and to date, 219 requests for aid of this type have already been favourably notified by the ministry, for a total aid amount of €63.07 million. Most of the projects that have benefited from Neistart aid are related to the industrial sector for nearly €20 million, followed by the construction sector for €15.7 million, and trade for more than €9.9 million.
Details of all aid schemes are available on guichet.lu.