March 2020 brought a Coronavirus to the world and it is really a scary one. It emerged from China and now spreads across all the continents.
- It caused a lot of casualties and hundreds of thousands were infected.
- W.H.O declares it as a pandemic.
On one hand the world is fighting for health and on the other hand as one community we have to keep the nations and individuals financially strong enough so that they can hold their future. Pandemic will be over soon and till that the nations should have to take decisions to hold up their economies. Whole world is worried about the current situation but there are few who have been much more worried than others.
Who must be more worried?
Freelancers or self-employed people across the globe contribute a lot to the nation’s economy. Freelance market is one of the major sources that bring money and value to a nation. At this time, when there exists a pandemic in the world and we are fighting for health and to heal the world and wipe out the virus, there are a lot of things that are getting affected.
“Unable for small businesses to manage day to day financial activities”
Small businesses are unable to manage their day to day finance because of the lock downs and the unavailability of the resources. Freelance market is going down, causing tough time for the self-employed freelancers to stand back on their feet. World seems to have a shortage of supplies and daily products and among them the hand sanitizers and surgical masks are the most prominent.
Coronavirus aid: How to help?
At this state of Pandemic, how can we cope with all the degradations we are facing? The few important products which are not available in the market due to several reasons including the stockers who have stocked the products to push the prices for their personal benefit or may be the low availability of the raw material or resources to the manufacturer to keep developing the products.
Small businesses which are already in the market need to be stabilized and it’s a good opportunity to start a new business that offers the products which are short in the market. Small businesses can cover a low range of market but indeed in the presence of hundreds of such temporary startups can offer a very helpful hand to the public.
However, the issue is of finance and budgeting because due to the Coronavirus concern, the small businesses already in need of financial aid to make themselves survive for a little longer. In such a situation, new startups and the existing ones can only be stabilized when there is financial aid that helps their business activities during the Pandemic.
Leading the world, Germany has taken the initiative to grant aid for freelancers and small business owners. This indeed is a very good step at a very right time. Their aid policy stated that if a small business owner needs financial aid to keep continuing with the business he or she can ask for the aid. At any point the aid receiver is found not eligible for the financial aid, that whole amount will be converted as the loan which the owner should give back to the state.
German Government Grant
The European Commission (EC) authorized on Sunday the plans of the German Government to provide liquidity to its companies through state-subsidized loans to deal with the coronavirus, measures that have been approved thanks to the relaxation of State Coronavirus aid rules.
“The Commission concluded that the measures are necessary, appropriate and proportional to remedy a serious disturbance in the economy of a member state,” the community executive said in a statement, stressing that they are in line with the temporary measures adopted to facilitate the granting of State support.
KfW Bankengruppe (banking group): Coronavirus aid
Specifically, Germany has received authorization for two credit-granting programs through its national promotion bank KfW.
- The first will allow the public bank to cover up to 90% of the risks of loans to companies of any size that have a maturity of up to five years and do not exceed 1,000 million euros per company.
- The second will allow KfW and private banks to provide loans through a consortium in which the State will cover up to 80% of the risk of a specific loan, but not more than 50% of the company’s total debt.
The EC approves public aid from Germany to its companies due to the pandemic
Berlin plans to give up to half a trillion euros in liquidity with these measures, according to the German government when announcing the package a few days ago.
“These measures will allow KfW to provide liquidity in the form of subsidized loans to companies affected by the coronavirus outbreak. This will be done in close cooperation with commercial banks,” the Commission explained.
The Community Executive has given the green light considering that the measures are in line with the Temporary Framework for State Aid launched in the wake of the pandemic since the loans will only cover liquidity needs in the near future, they will only be granted until later this year and will be limited to a maximum of six years in duration.
According to Brussels, KfW agreements with commercial banks will ensure that the benefits they receive through these subsidized loans are effectively passed on to companies.
The European Union adopted this Temporary Framework on March 19, which will allow States, in an exceptional way, to channel aid in the form of fiscal advantages, guarantees and public loans to companies, and support for banks to face the economic impact of the coronavirus.
This system, which was already used in 2009 during the financial crisis, allows Brussels to authorize public aid that under normal circumstances would not be accepted as long as it is “intended to remedy a serious disturbance in the economy of a Member State”.