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Swedish aid packages to companies affected by the corona-crisis

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calendar 30 March 2020
globus Sweden

Sweden has become an international outlier in its response to the corona pandemic by keeping public institutions open and adopting only few other restrictions. However, the financial impact of the coronavirus has also left the Swedish economy threatened. Consequently, the Swedish government has released economic aid packages offering easier financing for SMEs and improving credit supplies to companies.

Aid specifically targeted towards SMEs

In an attempt to minimize economic consequences of the coronavirus pandemic especially for SMEs, the Swedish government has recently proposed the following measures:

  • A central government loan giving primarily SMEs access to financing, offering a state guarantee of 70 % of new loans, which banks will provide to companies that are experiencing financial difficulty due to the corona virus outbreak, but which are otherwise robust.
  • Temporary reduction of employers’ social security contributions and individual contributions so that only age pension contributions shall be paid.
  • Temporary discount for rental costs in vulnerable sectors, such as durable consumer goods, hotels, restaurants and certain other activities. The government will cover 50 % of the rental reduction and up to 50% of the fixed rent. The aim is to facilitate and speed up renegotiation of rents.
  • A temporary change of the rules for tax allocation reserves for sole proprietors severely affected by the corona virus outbreak to receive tax cuts.

Improving credit supplies to companies

The Swedish Riksbank will initiate a purchase of commercial papers and have proposed to temporarily enlarge the circle of monetary policy counterparties:

  • On 2 April 2020 the Swedish Riksbank will initiate the purchase of commercial papers issued in Swedish kroner by Swedish non-financial corporations to a nominal amount of SEK 4 million. The purchase will be made on the secondary market and the issuing companies shall have a rating corresponding to Baa3/BBB- or higher.
  • The Riksbank has furthermore decided to give institutions that are under the supervision of Finansinspektionen but are not monetary policy counterparties the opportunity to participate in issuing loans to companies via banks. This has been done in order to reach more non-financial corporations.
    • From 13 March 2020 the Riksbank has lend SEK 500 billion to companies via the banks.
    • From 24 March 2020 till 17 April 2020 the Riksbank has given SEK 400 billion in loans to banks, with the aim of increasing banks’ lending to companies.
    • The loans are issued against collateral at a variable interest rate corresponding to the Riksbank’s repo rate, presently at 0%, and will mature over 2 years.

VAT and tax deferrals

It has furthermore been proposed by the Swedish government that companies will be able to receive deferral with payment of employers’ social security contributions, employees’ provisional tax and VAT that is declared monthly or quarterly. The deferral includes three months’ tax payments and will be provided for maximum 12 months.

Credit guarantees for airlines

On 17 March 2020, the Swedish government furthermore proposed that airlines in 2020 will be given the opportunity to obtain credit guarantees worth a maximum of SEK 5 billion, of which SEK 1,5 billion is directed to Scandinavian Airlines (SAS).

Employment-related measures

Besides for the schemes intended to cover general costs, the Swedish government has introduced several measures to help companies with covering employment-related costs. You can read more on those schemes here.

IUNO will keep a close eye on the further development of the economic measures that continuously are being proposed by the Swedish government and, perhaps more importantly, what criteria companies must fulfil in order to be able to benefit from these aid packages.

Aid specifically targeted towards SMEs

In an attempt to minimize economic consequences of the coronavirus pandemic especially for SMEs, the Swedish government has recently proposed the following measures:

  • A central government loan giving primarily SMEs access to financing, offering a state guarantee of 70 % of new loans, which banks will provide to companies that are experiencing financial difficulty due to the corona virus outbreak, but which are otherwise robust.
  • Temporary reduction of employers’ social security contributions and individual contributions so that only age pension contributions shall be paid.
  • Temporary discount for rental costs in vulnerable sectors, such as durable consumer goods, hotels, restaurants and certain other activities. The government will cover 50 % of the rental reduction and up to 50% of the fixed rent. The aim is to facilitate and speed up renegotiation of rents.
  • A temporary change of the rules for tax allocation reserves for sole proprietors severely affected by the corona virus outbreak to receive tax cuts.

Improving credit supplies to companies

The Swedish Riksbank will initiate a purchase of commercial papers and have proposed to temporarily enlarge the circle of monetary policy counterparties:

  • On 2 April 2020 the Swedish Riksbank will initiate the purchase of commercial papers issued in Swedish kroner by Swedish non-financial corporations to a nominal amount of SEK 4 million. The purchase will be made on the secondary market and the issuing companies shall have a rating corresponding to Baa3/BBB- or higher.
  • The Riksbank has furthermore decided to give institutions that are under the supervision of Finansinspektionen but are not monetary policy counterparties the opportunity to participate in issuing loans to companies via banks. This has been done in order to reach more non-financial corporations.
    • From 13 March 2020 the Riksbank has lend SEK 500 billion to companies via the banks.
    • From 24 March 2020 till 17 April 2020 the Riksbank has given SEK 400 billion in loans to banks, with the aim of increasing banks’ lending to companies.
    • The loans are issued against collateral at a variable interest rate corresponding to the Riksbank’s repo rate, presently at 0%, and will mature over 2 years.

VAT and tax deferrals

It has furthermore been proposed by the Swedish government that companies will be able to receive deferral with payment of employers’ social security contributions, employees’ provisional tax and VAT that is declared monthly or quarterly. The deferral includes three months’ tax payments and will be provided for maximum 12 months.

Credit guarantees for airlines

On 17 March 2020, the Swedish government furthermore proposed that airlines in 2020 will be given the opportunity to obtain credit guarantees worth a maximum of SEK 5 billion, of which SEK 1,5 billion is directed to Scandinavian Airlines (SAS).

Employment-related measures

Besides for the schemes intended to cover general costs, the Swedish government has introduced several measures to help companies with covering employment-related costs. You can read more on those schemes here.

IUNO will keep a close eye on the further development of the economic measures that continuously are being proposed by the Swedish government and, perhaps more importantly, what criteria companies must fulfil in order to be able to benefit from these aid packages.

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Aage

Krogh

Partner

Anders

Etgen Reitz

Partner

Franziska

Brüggemann

Associate

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