As part of the measures to support Swiss companies due to the COVID-19 outbreak, the Federal Council adopted on November 25, 2020, an ordinance governing the details of the hardship support program of the Swiss government and the cantons.

In a nutshell, the ordinance regulates how federal funds are distributed among the cantons and defines the minimal conditions which must be fulfilled by the companies under the hardship assistance program in order for the cantons to benefit from the federal funds. In this context, the federal ordinance shall be considered as a framework ordinance to be detailed by each canton who wish to implement a hardship support program.

The main conditions of the federal ordinance are the following:

Minimal eligibility conditions:

•  Company must have an identification number (registered in the commercial register);
• Company must have realized an average turnover of at least CHF 100’000 in 2018 and 2019;
• Company’s payroll costs shall be mainly generated in Switzerland;
• Company must be in hardship situation i.e. 2020 turnover less than 60% of the average turnover in 2018 and 2019 due to the governmental measures against Covid-19 spread;
• Company was solvent and not in a situation of overindebtness before the pandemic;
• Company has taken necessary measures to protect its liquidity and capital;
• Company is not state-owned and has not benefited from other financial support specifically granted by the state to certain industries (sport, culture, public transports, medias);
• Company must undertake not to distribute any dividend, reimburse capital or grant shareholder loans during the financial support;
• Company shall not transfer the funds abroad.

Maximum financial support:

•  Loans and other guarantees are capped at (i) 25% of the average turnover in 2018 and 2019 and (ii) CHF 10 mio per company;
• Financial contributions (without issuance of shares or other form of compensation) are capped at (i) 10% of the average turnover in 2018 and 2019 and (ii) CHF 500’000 per company;
• If loans/guarantees and financial contributions (without issuance of shares or other form of compensation) are granted in parallel, the total amount is capped at (i) 25% of the average turnover in 2018 and 2019 and (ii) CHF 10 mio per company.

This federal ordinance entered into force on December 1, 2020. Each canton will decide whether to implement such program, under which form (loan, guarantee, contribution, etc.) and under what conditions. In particular, the cantons may have additional conditions in its regulation and specify for example that only certain industries are eligible to request hardship assistance. Similarly, each canton may go beyond the above-mentioned financial support cap by drawing on its own reserves (other than the federal funds).