A number of the support measures implemented by the Luxembourg government in order to respond to the Covid-19 crisis are applicable for startups, and more is yet to come. This was the main message of the webinar for startups held on 8 April 2020, the first one in a series organised by the Ministry of the Economy and Luxinnovation.
Over 200 entrepreneurs joined the webinar that was opened by a brief welcome address by Minister of the Economy Franz Fayot. “I would like you to benefit from all the measures that the government has put in place to support you,” he pointed out.
Capital grant advance, young innovative enterprise grants
Frédéric Becker, advisor for financial technology at the Ministry of the Economy, provided an overview of the government’s most relevant support measures for startups. He put particular emphasis on the capital grant advance that is available for all companies, including early-stage startups and self-employed people. The advance, of a maximum of €500,000, requires no guarantees, offers a flexible reimbursement model and can be cumulated with other support packages. Eligible companies have to be able to show that they were not in financial difficulties prior to the crisis, but this criterion does not apply to companies less than 3 years old.
I strongly encourage you to apply, Mr Becker said.
He also explained the changes that have been made to the Young innovative enterprise grant offered by the Luxembourg government. In order to support startups during the current crisis, the state has increased its co-funding under this measure from 50% to 70%. Previously, the subsidy has mainly been used for large projects requiring close to the maximum co-funding amount of €800,000. Now, however, much smaller projects, down to those with a co-funding need of around €200,000, will be considered. “The ministry has put substantial resources in place to be able to process new grant applications quickly,” Mr Becker pointed out. “In addition, the volume of documentation needed to apply will not be as extensive as it was in the past.”
Bank loan flexibility and new support
Luxembourg banks were also quick to respond to the challenges brought by the coronavirus crisis. “We reacted directly by deciding a moratorium of 6 months of loan reimbursements for our existing clients,” said Guy Wollwert, who heads the industry and technology department of state-owned development bank SNCI. He also outlined the “special anti-crisis financing” put in place by SNCI together with five commercial banks. These loans, of which 60% are provided by SNCI and 40% by the banks, target exceptional costs incurred by the crisis that are not covered by other measures. He also indicated that SNCI is working on an additional measure that will soon be available.
Several commercial banks that offer corporate funding have also put in place reimbursement moratoria. “We have put in place a fast-track mechanism that allows delaying reimbursement,” Jeffrey Dentzer, Head of Corporate & Institutional Banking at BIL, explained. “The banks are in close contact to find a common ground for supporting our clients. This crisis can only be solved if we all work together.” BIL also offers small bridge loans to help companies cover salary costs while waiting for their applications for short-term employment support to be processed.
Startups and self-employed: more to come
Additional support measures are currently being developed as the needs arise. “There is more to come in the coming days and weeks, also for the self-employed,” said Stefan Berend, Head of Startup Acceleration at Luxinnovation. He also highlighted the call for startup projects “StartupsVsCovid19” to be launched on 9 April 2020. “Check out the Startup Luxembourg website for more info about the call and to register for the next webinar,” he concluded.