Business support credit program from June 1

2024 Author: James Gerald | [email protected]. Last modified: 2023-12-17 14:00

Starting from June 1, 2020, Russia is launching a new business support loan program aimed at preserving jobs. Yesterday, at an expanded meeting on gradual withdrawal from the high alert regime, the president announced who is entitled to concessional lending at a rate of 2%.

What was discussed at the extended meeting

On May 11, a regular videoconference meeting was held on the gradual relaxation of the strict restrictions regime.

There, the President of the country announced numerous measures to stimulate the economy, support business, improve the situation of people who have lost their jobs, raising children in a difficult financial period.

1. The new loan program will be launched on June 1. Its purpose is to support enterprises in the industries most affected by the coronavirus pandemic. A loan at 2 percent will be available to entrepreneurs from the first day of summer to pay salaries to employees. And also for restructuring the debt on the previously received interest-free loan, the money for which was also allocated by the state.
2. Cancellation of the high alert mode - the main topic of the meeting - still depends on the opinion of epidemiologists, therefore, it does not apply to all regions. In Moscow, this regime has been extended until May 31. But in general, in the subjects of Russia with a moderate level of morbidity, it is planned to remove some restrictions, start the work of the basic industries.
3. Communications and energy, coal, oil and gas mining, heavy and light industry, construction, the agricultural sector, and other industries not related to servicing a large number of customers are being launched.
4. New measures to support families with children were announced: payments to the poor, with a per capita income not higher than the regional minimum, raising children from 3 to 7 years old, allowances for children whose parents have lost their jobs, doubling the minimum allowance for a child until they reach 18 months.
5. In addition to the new credit program, which is being launched in Russia from June 1 with a final rate of 2%, other measures to support business are being introduced. These include: the write-off of taxes for the II quarter of 2020, the return of the paid income tax in 2019 and the accrual of an allowance in the amount of 1 minimum wage.

The preferential loan program, which will be launched throughout the country from June 1, is provided for small and medium-sized businesses, socially-oriented NGOs working in the previously listed industries most affected by the coronavirus.

The lack of demand for the services they provide is the result of bans and restrictions imposed during the pandemic. To facilitate the gradual transition to ordinary life, a loan is introduced at 2 percent.

Conditions for issuing funds and settlement system

The President of Russia explained that the new credit program is envisaged as an additional measure to support employment of the population in industries that cannot yet reach the previous level of income. The gradual withdrawal of the population and the economy from the regime of forced restrictions may lead to prolongation of difficulties with the payment of wages at enterprises whose products do not yet have a consumer.

A 2% loan is a tax-free measure proposed by the state to support employment and maximize the preservation of jobs at enterprises and socially oriented non-profit organizations. The essence of the program:

• the rate of 2% is preferential, this is the final result obtained with the help of state subsidies;
• interest is not paid monthly, but capitalized, since the state guarantee provides 85%;
• the amount is calculated using the formula 1 minimum wage multiplied by the number of employees;
• start from June 1, maturity date - April 1, 2021;
• if the entrepreneur or management retains 90% of jobs, the loan and interest on it will be completely written off;
• if 80% of employees continue to work, the state will repay half of the loan and interest.

The amount received on concessional lending can be used to restructure a previously taken interest-free loan with a shorter maturity. All measures envisaged by the business support loan program - from tax and insurance payments for the second quarter to a loan at 2% - are designed to support more than 1.5 million enterprises. The program starts on June 1.

Summarize

1. During the difficult period of the pandemic, the country's leadership has developed a number of effective measures for industries affected by the coronavirus.
2. An interest-free loan should be used to pay off wage arrears.
3. Insurance premiums and taxes will be written off for the second quarter of 2020.
4. A program of concessional loans at 2% was introduced to pay salaries and retain staff.
5. The government promised a full cancellation of the debt if management retains 90% of jobs by April 1, 2021.