Government crisis support for small businesses

Government crisis support for small businesses

The coronavirus pandemic has seriously affected the world, the Norwegian economy has stopped and half the country is in quarantine. Several companies have been forced to lay off employees and risk bankruptcy as a result of the corona virus while others risk suffering major losses. The government presented a crisis package this week, but what does this really mean and what are implications for self-employed and small and medium-sized businesses?

What is the government's crisis package?

Small and large companies in all industries are now experiencing enormous consequences as a result of the COVID-19 coronavirus. Sales and demand have been sharply reduced as a result of closed premises and fears of an unstable economic future. This is a situation we have never seen before, and several companies face a dilemma where they have to make a choice between customers or themselves.

Over the past week, the government has issued parts of a crisis package aimed at limiting the financial loss experienced by several industries as a result of the coronavirus pandemic. The crisis package is about the everyday life of the Norwegian people, about securing jobs and, consequently, the future.

The Prime Minister is quoted on government.no:

"The Norwegian economy is currently facing a very challenging situation. The government will do what is needed and provide the necessary funding to safeguard the Norwegian economy and support Norwegian businesses, large and small"


Some of the key takeaways:

  • The employer's contribution is reduced by 4 percentage points for two months
  • The low VAT rate will be reduced from 12 to 8 per cent for large parts of 2020
  • The laid off will receive full salary covered by the state for 20 days (up to 6G)
  • Self-employed and freelancers can get 80 percent of their income from NAV, as well as the right to sickness benefit from day three


What is the SME crisis package?

However, business owners believe that reduced VAT and cuts in the employer's contribution are not sufficient for them to survive. They need liquidity in a transitional phase. They need funds to restructure and adapt to new markets.

On Sunday, the government announced that they would put in place a crisis package for small and medium-sized businesses in the form of a state loan guarantee for bank loans. Basically, this should have a limit of NOK 50 billion. It has not yet been finalized how the loan guarantees in the crisis package should look and how the loans are distributed.

However, at first glance it appears that the state guarantee will mainly apply to companies that can provide collateral for the crisis loan in real estate or other means. Several large banks are also experiencing difficult times, and many of these will be concerned about securing their own values. In other words, for several self-employed and SME companies, without the possibility of providing collateral, it will not be a solution to take out expensive loans. Hence, they might be excluded from the government's promising crisis package.


What if the crisis package doesn't help my business?

Several companies have already done almost everything they can to reduce their costs. They have reviewed future receipts and disbursements, requested payment deferrals and laid off several or all of their employees. Even after such cuts, many companies are left with large expenses related to, among other things, rent and cost of loans.

In such situations, it will be natural to use your overdraft facility. Traditional banks do not prioritize small and medium-sized businesses that “only” need NOK 50,000 to 500,000 to finance new projects and cover ongoing expenses. However, in Aprila, we specialize in overdraft facilities tailored to small businesses. Now your business has access to financing at no fixed cost - you only pay for what you use.

We do not know how long this situation will last, and companies are therefore always forced to think creatively. Several companies we have been in contact with have found new ways to sell and deliver goods and services. Others have chosen to take out short-term loans in order to keep head above water.


What does Aprila do to help small businesses?

Just as in the country's small businesses, Aprila is working day and night to adapt to new working lives, and to engage in dialogue with key players such as political authorities, the Ministry of Finance and the media. According to our estimates, there are about 140,000 companies in the country with 1 to 19 employees. These companies employ around 670,000 people, corresponding to 25% of all employees in Norway and one third of those employed in private business. Aprila's focus now is to present - and become part of - a solution that ensures that they receive the help they deserve. We know that there are far too many small businesses that have been withheld for many years by a financial toolbox built for large companies.


Questions about financing

If you have any questions about our financing services Aprila Invoice Sales and Aprila Kassekreditt, you can call us by phone:

23 96 68 68 (9 am-5pm)