COVID-19 Support: Innovative Swiss Startups To Receive Federal Funding Support
by Company Announcement April 22, 2020Innovative startups are an important factor in the success of the Swiss economy. To date, however, startups have had little or even no access to the Confederation’s existing emergency aid. Therefore, as a supplement to the federal COVID-19 credits and cantonal support measures, the Confederation is planning to use the system of guarantees to shield start-ups from coronavirus-related insolvency.
Under the Federal Council measures taken to date, specific business models had only been included to a limited extent. For them, access to the Confederation’s existing emergency aid was either not possible or very restricted. Certain cantons have introduced supplementary measures in recent weeks. However, owing to the withdrawal of some investors and the resulting delays or cancellations of funding rounds, further action is needed. Therefore, the Federal Council has examined ways in which coronavirus-related insolvency can be avoided at promising start-ups.
Focus on swift implementation, 65% by State, 35% by Canton
Given the urgency, the Federal Council decided on 22 April 2020 to use the existing system of guarantees for SMEs to provide support for start-ups. This approach can be implemented without the need for a time-consuming legislative amendment.
It is planned to create a new procedure for start-ups under the existing system of guarantees by 30 April 2020. The Confederation will guarantee 65% of a credit, and the cantons the remaining 35%. It is for individual cantons to decide whether they wish to offer this guarantee facility, originally intended for SMEs, to their start-ups. Some cantons have already committed considerable resources to other kinds of support for start-ups.
If a canton decides to offer this new instrument, start-ups can submit a guarantee application to the relevant cantonal office by 31 August 2020. Where necessary, the office can consult an advisory board set up by the Swiss Innovation Agency (Innosuisse). If the office approves the application, it is passed on to a federally recognised guarantee organisation. The latter will issue the guarantee confirmation, which the start-up can use to apply for credit from a bank of its choosing. In this way, the Confederation and the cantons jointly guarantee 100% of a credit. The Confederation can guarantee up to CHF 100 million in total with this process. Including the cantons, guarantees can thus be provided for up to CHF 154 million in credits.
Max 1milion CHF per Startup
By 30 April 2020, the State Secretariat for Economic Affairs (SECO), in consultation with the interested cantons and the guarantee organisations, will draw up the practical criteria for using the instrument and will publish a list of participating cantons and relevant offices, as well as further details on the procedure.
Maurer added at the press conference: Guarantees will be max 1 million CHF per startup for about 10 years.
