Premises rental compensation: a popular but expensive means of losing business Business

15 minutes announced that the second time the global quarantine is announced, the government in turn is preparing a new aid plan, which is likely to be more modest but more targeted at coronavirus victims. On this occasion, there should be no way to compensate for the rental of the premises, although the latter is named by employers as one of the most important.

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Rent compensation has eased the burden

Aleksandras Gavrilovas, director of Zoopark.lt, a public institution that manages zoos in Vilnius and Kaunas 15 minutes He assured that the reimbursement of the rent during the first quarantine was a very tangible help and contributed significantly to the preservation of the business.

“Discount of the subsidy from the owner and the state, it was still possible to survive. And now, if there are no such subsidies, it will definitely be difficult for some tenants and for us at the same time, ”he explained.

According to A. Gavrilov, the rent compensation mechanism was very clear, but it is not clear how it will be now.

“Any subsidy measure is welcome, but until we know what specifically, I cannot comment much,” commented the interlocutor.

Inga Zimkevičiūtė, director of the Kauno viešbutis company, spoke in a similar way. According to her, two measures – wage compensation and rent – eased the burden on the company, but she did not want to comment on the new measures.

“It all depends on the sizes, the way it is made. It all comes down to how the paperwork will need to be submitted, how long it will take, what the sizes will be. If the amount of the subsidy is significantly less than what we received before, it is certainly better to have everything as it was before and repay a part of the rent. Or maybe it would be more convenient if the amount was allocated, which we could distribute ourselves. But I’m not going to comment, I can only comment on what I know really well, “he explained.

And Gediminas Balnis, Vice President of the Lithuanian Hotel and Restaurant Association, explains that rent compensation is a very important and proven help measure in Lithuania.

“Yes, its implementation has not been easy, but both the company and Invega have already worked hard to harmonize conditions, register leases, it is necessary to take advantage of this work and continue the aid measure,” he said.

According to G. Balnis, subsidies and other support measures cover companies’ costs, such as: utility costs, part of the employer’s salary, administrative and other costs for several months. However, the rental of premises accounts for most of the costs in this hotel and restaurant business.

“So it is natural that general subsidies are not enough for that. Here, Amber Food’s monthly rental costs amount to almost 400 thousand. 200 thousand euros, when the full amount of aid is provided. Euros” , he assured.

I had a hard time taking advantage

Mantas Badikonis, head of the Gym Plus sports club network, also highlighted the importance of the compensation measure for the rental of premises. According to him, this aid measure was especially important for the company.

“Because we lost 100 percent during the quarantine. The income and activities of the sports clubs are mainly based on fixed costs and the rent of the premises represents the majority of the mentioned costs, so the rental subsidies received allowed us breathe better, ”he said.

It is true that according to M. Badikonis, a lot of work was needed to use this tool. First, the discount had to be agreed with the owners, there was a deadlock and the application system was not always accurate, there were unclear errors in the applications and changes in the evaluation criteria.

“The complexity of the process mentioned above meant that almost a month after the start of this support program, we were perhaps the thirteenth company (one of the first) to be compensated. So it just shows that some companies, even if they wanted to, did not cross the street to provide support. Thus, from a statistical point of view, it is natural that such a country support program may seem irrelevant / inefficient for business, because a rare company has been able to use it, and now we hear about the abolition of this support ”, he is convinced.

One of Invega’s most popular tools

From the start of the measure (May 4) to November 9, Invega has received a total of 7.5 thousand. Complete rental refund applications. Of these, 4,460 positive decisions were made – compensation was awarded to more than 4,200 companies and entrepreneurs.

To receive this support, the lease had to be registered with the Registry Center. According to the institution’s data, since May, when the rent compensation support measure came into effect, a total of almost 12,000 people have registered at the Registry Center. legal facts about the leases entered into.

The average amount of compensation per company in October was € 7,262. The amounts of compensation awarded range from a few hundred to 263 thousand. euros.

A total of LTL 40 million has been allocated for rental compensation. euros.

“The number of contracts currently awarded based on submitted and approved applications exceeds 32 million. So we plan to use the full amount of the instrument in the near future,” 15 minutes said Kęstutis Motiejūnas, CEO of Invega.

It is true, companies and entrepreneurs until December 1. You can still request reimbursement from Invega for rents, so this measure is still being implemented.

“We remind you that the reimbursable lease period is until 2020. August 31, 2010 and the compensation will be paid until 2020. December 31,” said the owner of Invega.

K. Motiejūnas admits that reimbursement of rental costs is one of the most numerous (when evaluating applications) and most popular measures administered by Invega. It is also a tool with the most unique situations that cannot be predicted or described in advance. As a result, there are a number of errors when completing applications, which always require special care.

Furthermore, the administration of this measure is much more expensive compared to other “combat” measures. It is also important to mention that the criteria for companies seeking rental compensation do not include the criteria for billing drops or that companies do not necessarily have to be affected by COVID-19 or the effects of a pandemic, so a very large number Most companies can benefit from this measure.

However, we believe that both this and other measures by Invega to mitigate the negative economic consequences of COVID-19 have helped and continue to help businesses stay afloat and recover faster. ” 15 minutes K. Motiejūnas commented.

Rent compensation would be replaced by subsidies

Advisor to the Minister of Economy and Innovation Evelina Butkutė-Lazdauskienė 15 minutes He stated that the administration of this measure is quite complex and expensive. As the measure is still ongoing, the government does not yet have information on the funds used to administer the measure.

“However, given the actual use of the funds (digitization of the instrument, data recording, assessment of difficulties, etc.), we anticipate that administrative costs could be 3-4 times higher than for other instruments,” he said.

According to E.Butkutė-Lazdauskienė, for this reason the Ministry has opted for the option of subsidies to companies, which will be approved by the Government.

And companies that have received subsidies will be able to cover rental costs with those funds, if necessary. So we basically avoid duplication, “he said.

Who will be eligible for support? According to E.Butkutė-Lazdauskienė, last week the government meeting approved the criteria proposed by the Ministry of Economy and Innovation for granting business support.

“Taking into account two criteria: that the turnover of the company in 6 months was reduced by 30 and more percent compared to the same period last year, and that the sector of companies that experienced such a drop in turnover is at less than 40 percent – Together with the Ministry of Labor and Social Affairs and the State Tax Inspectorate, the Ministry is drawing up a list of activities to which companies most affected by the COVID-19 pandemic may benefit from support measures ”. 15 minutes she said.

It is not yet clear what the level of the subsidies will be, as the measures are still being developed.

“It is considered that the amounts of the subsidies could reach 30 or 50 percent. of the GPM paid last year, and the individually evaluated companies would receive soft loans for the most affected activities according to their financial situation. The loan amount could reach up to 300 thousand. euros ”, he explained.

It is estimated that the initial grant would require around 80 million euros. and 30 million euros for the second line, soft loans. euros.

“It is hoped that funds will be provided for this as soon as possible, so that companies receive support after all problems have been resolved in December. The final decision on the measures will have to be taken by the Government,” commented E. Butkutė-Lazdauskienė .