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Recovering from COVID-19: Financial Aids for the Hospitality Industry in Germany

May, 2020

Hotels and restaurants are highly affected by the ongoing coronavirus crisis, as curfews and travel restrictions reduced the public life to a minimum. To provide companies with fresh liquidity, the federal government and the state governments support the German economy with immediate financial aids. But which state measures are available and how can you benefit from them?

We are happy to provide you an overview of the different measures, loans and compensations available. Nevertheless, we recommend that you consult your tax consultant, accountant or legal advisor to make sure to get all financial aids available to you to recover from the coronavirus crisis.

Government measures in general

With financial aids, the German government wants to minimize the burden of companies, including hoteliers and restaurant owners, during the coronavirus crisis.

Loans

To keep your business solvent during the state-imposed closure period, despite the lack of income, there are different loan options available.

  • First of all, you can obtain loans for companies from the KfW. The ´Kreditanstalt für Wiederaufbau´ is one of the world’s leading promotional banks. Companies and self-employed who would like to take advantage of such a loan  should contact their house bank or financing partners.
  • Moreover, you can also receive financial aids from the guarantee banks to ensure a recovery from the coronavirus pandemic.
  • A very helpful tool is the “Förderwegweiser – Die Fördersuche für den Tourismus”. Focussing on the tourism industry, it provides you an overview with all loans and financial aids available to you.
  • The Corona-Navigator provides you with a detailed list of the measures taken by the federal states to keep companies such as hotels and restaurants liquid.

Insolvency application

To avoid a wave of insolvencies, the government decided to suspend the obligation to file for insolvency. This adjustment is supposed to support struggling companies and give them the chance to apply for state aids. Nevertheless, there are strict requirements. So make sure to check the dedicated landing page of the Federal Ministry of Justice and Consumer Protection for further information.

Short-time work (Kurzarbeit)

Short-time work has already been a successful financial aid during the crisis in 2008/2009, and now during the coronavirus crisis it became just as important. It is aimed to temporarily relieve a company’s financial burden by reducing personnel costs while maintaining jobs. As a result, employees work fewer hours than agreed in their contract. In some cases, employees in short-time work might temporarily not work at all. However, they still receive a share of their wages as the government will compensate 60% of their net income, or respectively 67% if they have children.

On 22 April, the government decided that the short-time working allowance will be increased to 70% from the 4. month of payment for childless workers who are currently working at least 50 % less. From the 7. months, they will receive 80 % of their lost net income. These regulations will apply until 31 December 2020.

  • Here you can apply for short-time work benefits at the Federal Employment Agency.
  • The Federal Employment Agency also provides a dedicated FAQ page with many relevant information concerning short-time work allowance as a financial aid during the coronavirus pandemic.
  • The Federal Ministry of Labour and Social Affairs also provides companies with specific information concerning labour law and safety at work during the coronavirus pandemic.

Additional information

The DEHOGA created a very helpful landing page as well as an information sheet for hospitality related companies and businesses. They provide useful information on labour law, safety measures and other relevant topics such as short-time work or cancellation policies.

Furthermore, make sure to stay up-to-date about the current developments and restrictions published by official and renowned authorities such as the Robert-Koch-Institut or the Bundesinstitut für Risikobewertung.

 

Next to the financial aids to help your business recover from the coronavirus crisis, you should also make sure to pay attention to your Online Reputation Management. It is very important to actively influence your online reputation and your visibility on the internet, especially during a crisis as serious as the coronavirus pandemic. Check our blog post to learn more about it!

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