Anastasia Samusenko has talked with RBC about interest-free loans for salaries

A month has passed since the launch of the business support measure in the form of interest-free loans for salaries, and the first money has already been received by affected companies. However, the scale of assistance to small and medium-sized businesses during the period of the coronavirus pandemic and quarantine restrictions turned out to be significantly more modest than expected. Anastasia Samusenko, an Associate at Maxima Legal, told RBC Petersburg about the pitfalls on the way to obtaining a loan and what reasons banks can refuse to borrowers.

“A company that has been operating for at least a year in the sectors recognised as the most affected by the spread of coronavirus infection and is not insolvent may receive support in the form of a salary loan to employees.

However, evaluating whether a company is one of the most affected sectors can be difficult. So, it is enough for small enterprises and microenterprises that at least one of its types of economic activity (primary or secondary), indicated in the Unified State Register of Legal Entities as of 1 March 2020, and is included in the list of the most affected sectors. In fact, the requirement that the type of company activity be indicated in the Unified State Register of Legal Entities and included in the list of the most affected sectors is a significant stop factor. Since earlier this “characteristic” of the company was not of great importance for doing business, many, when registering a legal entity, included several types of activities almost randomly in the Unified State Register of Legal Entities. As a result such companies do not qualify for a loan.

Another condition is that the number of employees in companies that are not related to small and micro-enterprises should not be reduced by more than 10% per month.

Furthermore, since the requirements are assessed by banks, some banks present additional requirements to borrowers.

Unfortunately, for many employers, a support measure in the form of obtaining a loan to pay salaries to employees has proven to be useless in practice. This is largely due to the fact that most of the companies on the list survive mainly with working capital and now they cannot replenish it, because their activities are suspended. The likelihood that after six months – the period interest-free loans for salary payments are made for – the company will have the opportunity to return the money to the bank without delay, is very uncertain, and therefore many companies are not willing to take the risk. In addition, the loan is interest-free only for 6 months from the date of its receipt, following this banks have the right to charge interest, although not more than 4%.

It is more profitable for many employers to reduce the number of employees than to take this support measure, since the size of the loan is, in fact, limited by the minimum wage, plus regional variants and the amount of insurance premiums paid from the minimum wage. Retaining workers requires employers to invest a significant amount of their own funds to pay wages, since employment legislation does not provide for the possibility of reducing employees’ salary even during a period of inactivity due to circumstances beyond the control of the parties.”

To read the full article (in Russian), please see the RBC website >>>