The government is developing a rescue plan for small and medium-sized enterprises (SMEs) amid unprecedented sanctions. The first tranche of support for SMEs includes a reduction in lending rates, tax breaks and a range of administrative easing, two sources close to the government say, and a federal official confirms. The next package, which will be aimed at stimulating businesses to import substitution, is still being discussed, the interlocutors say. The plan will be updated as the situation develops, they specify.
The first measures are aimed at reducing the risk of default for small and medium-sized businesses (the support sector will also include individual entrepreneurs), which may arise due to a break in supply chains and a credit burden, the federal official says.
A representative of the Ministry of Economics said that under the leadership of First Deputy Prime Minister Andrey Belousov, the department is consulting with businesses, banks, public associations to develop tactical and strategic measures to support business in the current environment. Vedomosti sent a request to Belousov’s office.
The government plans to change the terms of the 1764 SME loan program. The current conditions assume that the rate is calculated according to the formula “the key rate of the Central Bank + 2.75%” – at the moment it is 22.75%. Given the Central Bank’s rate hike, lending conditions are not favorable for SMEs, the federal official says, so one option is to lock in the rate at 9.5% before the emergency hike. Thus, the rate under the program may be equal to 12.25%, but this is not the final option.
On March 5, the Central Bank decided to allocate an additional 500 billion rubles. banks for soft loans to small businesses. In particular, 340 billion rubles. will be allocated to fund rates under revolving lending programs at a rate of no more than 15% per annum for small enterprises and no more than 13.5% for medium enterprises. The program is valid until December 30, 2022. Another 160 billion rubles. The Central Bank will allocate SME Corporations (KMSP) under an expanded program to stimulate lending to small and medium-sized enterprises. The rates for it will be the same, the program limit will reach 335 billion rubles. in 2022
The government also plans to increase the guarantee protection of small and medium-sized businesses based on the CMSP umbrella guarantee mechanism. Within the framework of the mechanism, an increase in the size of the subsidy for payments on guarantees at the level of about 6 billion rubles was discussed. until 2024, but the final decision has not yet been made, the source clarifies.
In addition, the ownership structure in KMSP can be changed and PSE status (public sector enterprise – public sector enterprise) can be assigned, the source says: this will increase the ability of banks to lend to SMEs. Now KMSP is 72% owned by the Ministry of Economic Development and 28% by VEB.RF. Recall that in February 2022, VEB.RF came under blocking US and EU sanctions.
In addition, it is planned to simplify the access of SMEs to funds to support export activities under the national SME project, the federal official says.
As a representative of KMSP told Vedomosti, the board of directors decided to resume the anti-crisis program of concessional lending and business refinancing at a rate of up to 8.5% per annum, jointly with the Central Bank. The limit under the program will be 60 billion rubles. It will operate at least until the end of March, the source said.
The government is discussing tax breaks for SMEs, a federal official says. Options are being considered from transferring the payment of part of the taxes “to the right”, that is, tax holidays, to lowering rates and zeroing a number of taxes for several months, the source says.
The main tax burden for SMEs is property tax and insurance premiums. Now, for organizations and individual entrepreneurs included in the Unified Register of SMEs, the total rate of insurance premiums has been reduced from 30 to 15% for the part of salaries that exceed the minimum wage for a month. The rate of insurance premiums for compulsory pension insurance is 10%, for compulsory health insurance – 5%.
The government also plans to adjust the criteria for classifying as SMEs to expand the number of recipients of benefits, the source says: a separate bill will be prepared for this. The current conditions determine that micro-enterprises have an income of up to 120 million rubles, the number of employees is up to 15 people, a small business has an income of up to 800 million rubles. and a staff of up to 100 people, an average enterprise can have an income of up to 2 billion rubles. and up to 250 employees.
In addition, the removal of “covid” restrictions (cancellation of QR codes, requirements for catering hours, the amount of personal protective equipment) is being discussed, taking into account the epidemiological situation in the regions.
The procedure for terminating the activities of legal entities may also be simplified, the source said: a bill will be prepared that will reduce the liquidation procedure for SMEs from 1.5 years to 3.5 months and will require businesses to only submit an application to the Federal Tax Service.
Demand for SME products is planned to be supported by compliance with quotas for public procurement and purchases of state-owned companies from SMEs. The fact that such a measure is being considered was announced on March 1 by Russian Prime Minister Mikhail Mishustin. In July last year, the government approved a regulation that increases the minimum share of purchases of companies with state participation from SMEs from 20 to 25% of the total volume of contracts. Also, the share of purchases, the participants of which are exclusively SMEs (“special auctions”, the participation of large businesses is not provided) has been increased to 20%.
Earlier, the State Duma and the Federation Council have already adopted a draft law that allows SMEs to go on loan holidays until September 30 with the same rate and without worsening their credit history. The representative of KMSP said that now a government decree on the list of OKVED, to which this support measure will apply, should be adopted.
In addition, from March 10 until the end of 2022, there will be a moratorium on scheduled inspections of individual entrepreneurs, small and medium-sized enterprises. This measure has already been passed by Parliament. Also, the State Duma in the first reading adopted a bill reducing fines for small and medium-sized businesses.
These support measures will help stabilize the situation on commodity markets, said Dmitry Abbakumov, coordinator of Business Russia in the Central Federal District. Now it is necessary to provide companies with liquidity and resolve the issue with existing loan obligations, he says. “Many contracts have a floating rate tied to the Central Bank rate. And now, for previously issued loans, this rate should be around 20-22% – this will be collapse and bankruptcy for many companies. Therefore, I consider the measure to fix the rate for February 2022 to be very important and necessary for the economy,” says Abbakumov.
The proposed support measures will be relevant for businesses at the first stage, says Alexander Kalinin, head of Opora Rossii. At the same time, the main support – measures aimed at import substitution, tax incentives and financial assistance – is still under discussion, and business has great hope for them, says Kalinin.
“Business talks a lot about the need to stop, freeze the tax on the cadastral value, especially on the revaluation of the cadastral value,” says Abbakumov. Also, entrepreneurs are waiting for mechanisms to support employment on the example of the anti-currency payroll 2.0 loan program, which made it possible to write off loans in exchange for maintaining employment, he says.
There are also proposals to fix simplified taxes at a minimum level, and this should be done at the federal level, so that this is not decided by the regional authorities, which have different budgetary possibilities, but that it is a single rate for the whole of Russia – 1% of turnover or 5% of income minus expenses, says Abbakumov.
“In the current situation, any measures to increase the availability of financing for small and medium-sized businesses are urgently needed, especially on the horizon of the next 1-2 months. Everyone is already seeing a sharp rise in prices for almost all categories of goods, which is exacerbated by serious problems in supplies, as well as an increase in the key rate to 20%,” says Natalya Safina, head of the Macroeconomic Analysis and Financial Markets department of the CSR.
The most dangerous situation for small and medium-sized businesses now is the “freezing” of previously opened credit lines, as well as the revision of the cost of already issued and newly issued loans to 20-30% per annum or more, Safina notes. As a result, many business entities will simply be forced to stop their activities due to a lack of working capital, including for wage payments.
Now, many SME industries are likely to face a shortage of imported components and an almost daily review of purchase prices, the CSR notes. In addition, due to the expected deterioration of the economic situation, many citizens may face a reduction in income, loss of work and problems finding one. And this will lead to a drop in consumer demand, and, first of all, this may affect the service sector – in conditions of high uncertainty and declining incomes, people will especially carefully evaluate the feasibility of non-essential spending, says Safina.