COVID19: Cyprus targets 40,000 small businesses for cash lifeline

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A revised government scheme aims to help 40,000 struggling businesses and self-employed navigate their way out of COVID-19 lockdown with cash, €1.5 bln in state-backed loans, plus tax incentives.

Finance Minister Constantinos Petrides described it as a “bold financial package” to support both jobs and businesses.

Following a cabinet meeting on Thursday, Petrides told reporters the government decided to inject cash, in the form of grants, to small businesses with up to 10 employees, that have taken a battering from the coronavirus crisis.

Some 40,000 businesses are to benefit from the scheme, which will also cover the self-employed who either fully or partially suspended their businesses.

It is estimated that total liquidity that may be channelled into the market through guaranteed loans will be around €6 bln.

Those that fully suspended business until May 3 (when the lockdown was partially lifted) will receive €2,625 and after that date, €3,500.

Partially suspended businesses until May 3 will get €1,875, those in partial suspension after May 3 would receive €2,500.

The self-employed who have not able to work until May 3 will receive €1,125 and after that date €1,500.

Also approved were €1.5bn in state-backed loans: €300 mln for small businesses with up to 10 staff, €1 bln for small and medium enterprises, and €200 mln for larger entities.

The loans for very small businesses and self-employed will be guaranteed 85% by the state and 15% by credit institutions, while the state will be guaranteeing 70% of loans to be given to medium and large businesses, banking institutions will take on 30% guarantee.

Petrides said duration of the loans will be between three months and six years with favourable interest rates.

He said the government also approved a bill providing tax relaxations for landlords who bring down rents.

The minister said there will be a 50% tax break on the amount of the rent reduction that should be between 30% and 50%.

All measures are subject to the approval of parliament and the European Commission.

Petrides told reporters that Cyprus was one of the first states to step in and support workers and businesses, parents, vulnerable groups and students, during the coronavirus while boosting its health sector.
“I stated from the onset of the crisis brought on by COVID-19 that the government would be flexible in managing this new economic crisis,” said Petrides.

He said the government must be prepared to face any unexpected obstacle thrown in its way during the pandemic and to be able to overcome any problems the economy is to face in the aftermath of coronavirus.

He explained that the government will have to deal with the effect of the pandemic on public finances, but also be in a position to adopt financial measures to support both the market and employees.

“We have also made it clear that we will help our fellow citizens to the maximum of our fiscal ability, but without risking running out of fuel for our broader economic roadmap,” said Petrides.

He said it is within this context the cabinet, while moving forward with the second stage of managing the pandemic, the gradual easing of lockdown, approved a more targeted package of financial support.