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Emergency State Aid Framework for the COVID-19 Outbreak

COVID-19 does not discriminate - it is having a significant and unprecedented impact on businesses of all sizes.

Many businesses are having to contemplate not only job losses, but whether they will be able to survive the next few months or, in some cases, the next few weeks.

Compliance with the State aid regime in the current climate will not be high on the list of priorities but, even in these tumultuous times, the UK has to comply with the State aid regime. 

The Commission has set out a variety of options that Member States can use to provide vital financial support to businesses without falling foul of the State aid rules. 

The UK Government has announced a variety of funding, support measures and loans it will put in place to support UK businesses. It is likely that the most common intervention by the UK Government will be direct grants, repayable advances or tax advantages so we have considered this form of aid specifically. 

This form of financial support can be provided to businesses and will be considered an appropriate, necessary and targeted solution during the current circumstances. It will be considered compatible State aid if the following conditions are met:

  • the aid does not exceed €800,000 or £679,960 per business in the form of direct grants, repayable advances, tax or payments advantages;
  • all figures used must be gross i.e. before any deduction of tax or other charge; 
  • the aid is granted on the basis of a scheme with an estimated budget; 
  • the aid may be granted to businesses that were not in difficulty on 31 December 2019 or that are not currently in difficulty; and
  • the aid is granted no later than 31 December 2020.

Please note that there are specific conditions for for agricultural, fisheries and aquacultural sectors.

The Commission has also provided guidance on providing compatible State aid for: 

  • guarantees on loans; 
  • subsidised interest rates for loans;
  • guarantees and loans channelled through credit institutions or other financial institutions; and 
  • short-term export credit insurance.

Link to related article: ec.europa.eu/competition/state_aid/what_is_new/sa_covid19_temporary-framework.pdf

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