The coronavirus crisis necessitated various emergency measures by the authorities, which in some cases severely restricted freedoms. This particularly affected entrepreneurial freedoms.
An important measure to support the Swiss economy is ensuring liquidity through COVID-19 loans. These loans are guaranteed by the federal government and are interest-free up to CHF 500,000.
Many companies are able to remain liquid and survive thanks to COVID-19 loans. To protect the interests of the federal government as guarantor, the COVID-19 loans are governed by the COVID-19 Solidarity Guarantee Ordinance However, it is subject to conditions.
Many of these conditions severely restrict entrepreneurial freedom. Here is a selection of the restrictions:
- New investments in fixed assets are excluded
- Growth financing is not permitted
- Bank loans may not be repaid
- Group loans must not be repaid
- Loans may not be granted
- Shareholder loans cannot be repaid
- Distributions of dividends and profit shares are excluded
- Refunds of capital contributions are not permitted
The federal government has announced it will review and monitor the proper handling of COVID-19 loans. The final assessment of whether a violation of the regulations has occurred in a specific case will be determined in the event of a dispute. In principle, violations of the COVID-19 Solidarity Guarantee Ordinance constitute money laundering and must be reported by the lending bank.
However necessary a COVID-19 loan may be, the restrictions remain in place for the entire duration of the loan. Logically, business owners want to repay these emergency loans as quickly as possible to regain their entrepreneurial freedom.
If the company's prospects remain positive, or if the crisis even presents opportunities such as production expansion or acquisitions, refinancing a COVID-19 loan can be a sensible option. Crowdlending offers an elegant way to quickly access suitable financing, especially during this crisis. The fact that such a loan doesn't come with zero percent interest, but rather bears market-standard interest rates, is a price a true entrepreneur is happy to pay to regain their entrepreneurial freedom.
Yours truly, Michael Boge
