Caterers and entrepreneurs are currently facing the greatest financial challenge in decades. We have compiled five ways in which caterers can get through the crisis.
1) Reduce personnel costs without layoffs
When sales dry up, personnel costs can quickly become an existential threat. Layoffs are often not a good solution because caterers want to take responsibility for their team and will also depend on them after the crisis. However, there are other ways to reduce personnel costs. This helps prevent layoffs.
- Short-time work: If short-time work is applied for, the employer is immediately relieved of wage costs and, since recently, also relieved of social security contributions by 100%. Short-time work is also intended to enable entrepreneurs to resume work quickly and with the existing workforce once the loss of work has ended. The employee is protected from losing their job due to redundancy or the employer's insolvency and receives 60% of the lost net pay (67% if a child lives in the household). The local employment agency is responsible for short-time allowance. First, short-time work must be reported, after which short-time allowance can be applied for. As the Federal Ministry of Labour announced, short-time allowance can already be applied for under the future new rules. The improved short-time allowance is to take effect retroactively from 1 March 2020.
- Working time account: If a working time account has been agreed, plus hours can be used and – depending on the collective agreement or employment contract – minus hours may also be accumulated.
- Vacation: The employer may only unilaterally order vacation in very limited exceptional cases (e.g. arrangement for company-wide holidays in the employment or collective agreement, remaining vacation). However, in dialogue with employees, the possibilities for granting vacation adapted to the sales situation can be discussed.
- Operationally required notice of change: Under the conditions of the Protection Against Dismissal Act, an operationally required notice of change aimed at reducing the contractual number of hours may be possible.
Further information on reducing personnel costs can be found in this leaflet from the DEHOGA Federal Association.
2) Check whether insurance coverage applies
Another measure is the business closure insurance. If the authorities order that a business must be closed, it depends on whether the affected business has taken out business closure insurance and how the clauses are structured in the specific insurance contract. Therefore, check your existing insurance and, if necessary, ask the insurer. You may be entitled to insurance benefits.
3) Take advantage of subsidized loans
The federal government and the states have decided on a large number of financial support programs to bridge liquidity bottlenecks.
- KfW loans: The Federal Ministry of Finance has relaxed the requirements for KfW loans. Two loans are distinguished according to the type of company:
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- KfW Entrepreneur Loan: for companies that have been in existence for at least 5 years
- ERP Start-up Loan: for younger companies that have existed for less than 5 years
These loans are actually intended to finance investments or working capital. During the coronavirus crisis, KfW has significantly relaxed the criteria for lending so that companies can quickly obtain liquidity. Loans of up to €3 million can be applied for through the house bank without further review by KfW. Further information on the necessary steps to apply for a loan can be found here.
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State support programs: Not only the federal government, but also the states have pledged emergency programs for companies affected by coronavirus. The different support programs can be found here. At the Federal Ministry for Economic Affairs and Energy you can also search for suitable support programs.
For example: Berlin offers uncomplicated lending of up to €500,000 to bridge liquidity bottlenecks caused by the coronavirus crisis - interest-free and with a term of two years.
4) Apply for tax deferrals
To support businesses, the Federal Ministry of Finance has set out tax measures to bridge the strained liquidity situation.
- Application for an interest-free deferral, i.e. a “postponement”, and application for a reduction of advance payments of income tax and a reduction of the trade tax assessment amount
“Taxpayers demonstrably and not insignificantly affected directly may, by 31 December 2020, submit applications, stating their circumstances, for deferral of taxes already due or becoming due by that date, which are administered by the state tax authorities on behalf of the federal government, as well as applications for adjustment of advance payments of income tax and corporation tax.”
- Federal Ministry of Finance
You can find the document for the application here.
- Application for suspension of enforcement: Enforcement measures for all overdue taxes or taxes due by that date will be waived until 31 December 2020 upon application.
- Application for contribution deferral: A deferral can be requested for contribution payments to the employers' liability insurance association and hospitality industry. This application can be made by telephone (0621 4456 – 1581) or by email (beitrag@bgn.de). This applies to claims arising from contribution installments due from 15/03/2020 to 15/05/2020.
“We can offer the affected companies an interest-free deferral of contributions. In addition, if anyone is in arrears with contributions to us, we will suspend enforcement of our claims. In this way, we are making the contribution we can to avoid putting the affected companies under additional financial strain in a situation that threatens their very existence.”
- Klaus Marsch, Chief Executive Officer of the BGN
5) Use non-repayable emergency aid
On 23/03/2020, the Federal Minister of Finance and the Federal Minister for Economic Affairs decided that small businesses, solo self-employed people and members of the liberal professions with up to 10 employees can apply electronically for financial emergency aid without bureaucracy. These grants do not have to be repaid. Details on how to apply will follow shortly on the website of the Federal Ministry of Finance.
- up to €9,000 one-off payment per month for 3 months with up to 5 employees
- up to €15,000 one-off payment for 3 months with up to 10 employees
Conclusion
The current economic situation due to the coronavirus means an unprecedented challenge for caterers. That is why there are several financial aid measures that can be used to bridge this time. From reducing personnel costs through short-time work, to using business closure insurance, to grants and tax deferrals: caterers are fortunately being supported in many areas so that the crisis can be overcome well.
We wish all entrepreneurs good health and hope that, thanks to the wide range of support options, you will get through the crisis well.
Sources
https://www.haufe.de/steuern/finanzverwaltung/corona-steuerliche-massnahmen_164_511572.html
https://www.bundesfinanzministerium.de/Content/DE/Downloads/BMF_Schreiben/Weitere_Steuerthemen/Abgabenordnung/2020-03-19-steuerliche-massnahmen-zur-beruecksichtigung-der-auswirkungen-des-coronavirus.pdf?__blob=publicationFile&v=1
https://www.bundesfinanzministerium.de/Content/DE/Standardartikel/Themen/Steuern/Steuerarten/Gewerbesteuer/2020-03-19-gewerbesteuerliche-massnahmen-zur-beruecksichtigung-der-auswirkungen-des-coronavirus-anlage.pdf?__blob=publicationFile&v=2
https://www.bgn.de/presse/17-maerz-2020-berufsgenossenschaft-entlastet-betriebe/
https://www.mdr.de/thueringen/corona-formular-steuer-unternehmen-freiberufler-erleichterung-100.html
hier.https://www.dehoga-bundesverband.de/fileadmin/Startseite/06_Presse/Pressemitteilungen/2020/DEHOGA_FAQ_Kurzarbeit_Corona_200317.pdf
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