Swiss government doubles company bailout fund to CHF40bn
The government has decided to double the amount of emergency loans available to struggling companies to CHF40 billion ($41 billion). The current fund of CHF20 billion is expected to be used up “in the next few days”.
"There is still a demand from companies for loans and the number of requests keeps rising," said Finance Minister Ueli Maurer at a news conference on Friday.
The first CHF10 billion was being requested “as a matter of urgency”, he said.
A parliamentary committee, due to meet next week, has therefore been asked to approve a significant increase in the amount of funds needed to prop up the economy during the coronavirus crisis.
This would raise the total amount of state funding to around CHF62 billion, with other tranches of money set aside to cover the wages of workers who have been put on short-time hours and other targeted measures.
More than 75,000 credit agreements have already been approved to provide mainly small and medium-sized companies with some CHF14.3 billion in emergency cash to cover their immediate bills.
State-backed loans of up to CHF500,000 are interest free, while a rate of 0.5% is applied to larger credits of up to CHF20 million. Loans are limited to 10% of company revenues and are to be paid back within five years.
Maurer said it was a mistake to assume that the state would provide coverage for every eventuality.
"For the moment the loans seem to be the adequate response. We're assessing the situation permanently and it's possible that we may adjust our policy," he said.
Criminal sanctions
The bridging loan scheme was introduced on March 26 after the government ordered non-essential shops and services to close their doors. Cantons were later given permission to shutter certain manufacturing activities to prevent the spread of the pandemic.
While stating that the government is “assuming that the aid credits are not being abused”, Maurer said it wanted to tighten rules and procedures to prevent fraud.
"It's under control and we don't think there are massive attempts to abuse the system," he said.
The government wants to set up a central unit to weed out unwarranted or duplicate loan applications. Tax records will be analysed to make sure that companies are not inflating their sales figures to get larger loans than they are allowed, according to a government statementExternal link.
The finance ministry is also looking into ways to beef up criminal sanctions to prosecute not just fraudulent firms but also company directors.
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