Significant Financial Problems
Noordwijk, January 22, 2022 – Since April 6, 2020, entrepreneurs severely affected by the coronavirus crisis have been able to apply for wage cost subsidies from the UWV. The Temporary Emergency Bridging Measure for Sustained Employment (NOW) aims to help entrepreneurs keep their heads above water and continue paying their employees. But how does this work in practice? And what does the NOW mean for the national treasury?
In December 2021, within two weeks, 20,000 entrepreneurs submitted applications to the UWV for the seventh period of the NOW. In the first five periods of NOW, over 160,000 businesses received a total of 400,000 subsidies. The government has not yet published the number of applications received in the sixth and seventh periods. What we do know is that many subsidies are still awaiting final settlement.
No Final Settlement Yet
The 130,000 organizations that applied for state aid in the first NOW period had until October 31 of last year to submit their final assessment. Nearly 9,500 entrepreneurs did not meet this deadline. Together, these employers are responsible for an advance amount totaling 320 million euros: 4 percent of the total advance in the first period. Another 12,000 employers indicated that they did not yet have the required accountant’s or third-party statement for the settlement of NOW1. They have until early February to provide these documents.
Significant Financial Problems
When entrepreneurs fail to submit their final assessment on time, they are required to repay the entire advance amount. For entrepreneurs who must partially repay NOW support, the likelihood of facing significant financial difficulties is high. This is not only due to late final assessments. Entrepreneurs who generated some revenue during part of a NOW period are required to repay a (large) portion of the support.
In early 2021, the hairdressers’ association ANKO sounded the alarm. Many hairdressers generated no revenue during the lockdown and received NOW support. Not only did the first lockdown extend, but so did the second and third, resulting in losses during the lockdown being offset by additional revenue after reopening. During this period, many hairdressers worked extra hours. Since UWV uses quarterly data as the basis for the final calculation of NOW support, many hairdressers will have to repay a portion of the NOW support.
UWV will offer companies struggling to repay NOW support a payment plan of up to 5 years. However, many entrepreneurs also need to pay deferred taxes and often other COVID-19 aid or loans, such as TVL, TOZO, TONK, TOGS, or TOFA. Many entrepreneurs have already depleted their savings and now have substantial debts owed to suppliers and the government.
Not Yet Deregistered
In addition to organizations unable to repay excess state aid received, UWV faces another major issue with disbursed support. CreditDevice data shows that out of the total support disbursed, a staggering 242 million euros went to businesses no longer registered in the trade register. These are businesses that could not be saved by state aid and companies deregistered for other reasons. This concerns nearly 3,400 deregistered organizations with an average support of 71,250 euros. Some of the companies that received substantial NOW support and are no longer active include D-Reizen, Scheepswerf de Hoop Lobith, and QO Amsterdam. Whether UWV will ever recover these payments remains uncertain.
The end of the current lockdown is not yet in sight. The number of entrepreneurs able to repay excess state aid is expected to rise. The number of companies that received NOW support but did not survive will also increase, permanently reducing the NOW funds available in the treasury.
