First on-hands experience with emergency aid in NRW
© Wolfgang Filser
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First on-hands experience with emergency aid in NRW

Since Friday afternoon, North Rhine-Westphalia has had the possibility to apply for emergency aid. After the first few days of processing, we will provide you with on-hands experience of emergency aid in NRW.

285,000 applications have apparently already been received in the first few days. Thanks to the efforts of 700 employees working in extra shifts, 256,000 applications have already been approved. According to Prime Minister Armin Laschet, the state intends to pay out the first funds by the end of the week. Good news, which apparently confirms the first impression of unbureaucratic help.

However, the on-hands experience does not allow for a complete positive picture.

Constantly growing FAQ catalogue leads to uncertainty

At first sight, the application process appears to be unbureaucratic. But the devil is in the details. It is often not as uncomplicated as suggested. This is shown by the fact that the FAQ section on the state’s website is updated daily. Although this is understandable, it leads to uncertainties for many applicants and their advisors. So far, clear and legally sound answers are often not possible.

Contrary to the appearance on the landing page of the state, for example, the application is reviewed subsequently. The applicant only becomes aware of this when he holds the approval notice in his hands and studies the secondary comments to the end. These notices of approval contain further ambiguities.

Notices of granting repeatedly cause confusion

These notifications provide long explanations that put the first and uncomplicated impression into perspective. Moreover, they are not always clear in wording. In the following we have compiled two exemplary quotations:

„If, at the end of the three-month approval period, you find that this financial assistance is higher than your loss of turnover less any costs saved (e.g. rent reduction) and you do not (completely) need the funds to secure your economic existence or to compensate for your liquidity bottleneck, the excess funds must be returned to the account of the State Account […].

According to the application requirements, it is sufficient, for example, to assume a loss of turnover as a result of the Corona crisis – a legal fiction. Subsequently, however, the financing bottlenecks must have actually occurred. Otherwise, the company must repay the emergency aid. This only becomes apparent in the notice of approval.

„All relevant documents must be kept for 10 years from the date of the granting of this emergency aid (date of this decision)“.

On the basis of these formulations, companies must assume that there will be an ex-post review. There are no details of when the audit in question will take place. Nor is there any indication of the level of detail of the audit. The obligation to retain all (possibly) at some point relevant evidence dispels the impression of uncomplicated assistance once again.

Detailed requirements remain unclear

It is clear under what basic conditions companies receive immediate aid. If the companies concerned have not had any difficulties until 31.12.2019, they are eligible to apply for emergency aid. Beyond that, however, there is no absolute clarity.

Financing bottlenecks and economic difficulties are assumed in the application (fiction) if one of the four conditions mentioned (orders reduced or turnover reduced or official requirements or failure to cover short-term liabilities) is met. However, according to the information now available, the financing bottlenecks must actually be present in the decisions, otherwise the emergency aid must be (proportionately) repaid.

The other important prerequisite, not explicitly mentioned in the application procedure, is therefore that all possible liquidity reserves of the companies must be exhausted in advance. In our opinion, this is not apparent from the application form and the FAQs. The FAQ does answer the following question:

„Must private reserves be exhausted before the grant can be claimed?“

But this question does not get to the heart of the matter! The question should rather be: „Am I entitled to apply if I meet at least one of the four application criteria mentioned above, but have liquid funds at the time of application? From our point of view, clear definitions to answer this question are still missing.

Telephone calls with the Chambers of Commerce show that further questions remain unanswered in detail such as

  • How are sales defined?
  • What details are there on regulations for affiliated companies?
  • How are current liabilities defined?

The emergency aid is not a „gift“

We often experience that companies see the immediate aid provided by media coverage as „gifts“ from the authorities. This is wrong and often leads to discussions in consulting practice. It is clear that emergency aid is not a gift and only companies affected by the crisis can apply for it.

If you deliberately make false statements, this is subsidy sneaking. Serious advice – not only for moral reasons – should always point this out.

Our assessment

Thoroughness should therefore take precedence over speed in the application process. We will be happy to help you analyse whether your company meets all the requirements.

If we accompany you with your application, we advise you print out the current FAQs of the day and keep them on file. In addition, document your assumptions for the application requirements and, at best, draw up a liquidity plan.

We are happy to support you throughout the entire process!

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