Just as in other countries, many Russian businesses suffer from negative effects of the coronavirus pandemic. Small and medium businesses are the worst hit. On March 25, 2020 the President of Russia Vladimir Putin announced the first package of business relief measures. The measures fell under the criticism by business leaders and economists for both the volume of monetary support and the measures by substance. On April 15, 2020 President of Russia Vladimir Putin announced on the package of another business relief measures to mitigate the effect of the COVID-19 pandemic.
Small and medium business support
The President announced direct financial support for small and medium businesses. Starting from May 18, 2020 the companies that succeeded in retaining not less than 90% of their headcount as of April 1, 2020 will be eligible to receiving state funds to compensate some part of their salary expenses for April and May 2020. The amount of such relief shall be calculated as RUB 12 130 (the minimum statutory wage level) times the total number of employees as of April 1, 2020. This relief will be provided to small and medium businesses from the list of the most suffered industries published earlier. An amendment to the list has been proposed to include non-food retail outlets.
The first relief package envisioned bank loans to small and medium businesses for payroll. However, the banks were not willing to give such high-risk loans and those business relief measures appeared to be ineffective. Under the second relief package not less than 75% of such loans are supposed to be secured by guarantees of the state corporation VEB.RF
Support for large business
New preferential bank loans for the most important companies in different industries were announced as part of the second relief package. The state will provide a 6% subsidy of the interest rate on such loans. Half of these loans will be secured by state guarantees. The list of the most important companies will be further amended and defined by the Russian Government.
More than RUB 23 billion will be allocated for the support of aviation companies. Support measures for other sectors of the economy is still under consideration.
Regional relief measures
Russian regions are to receive RUB 200 billion from the Federal Budget to cover their expenses.
Thus, having defined the relief measures for small and medium businesses, the state is now shifting towards supporting entire sectors of the economy. The funding of business support measures has significantly increased in volume. Nevertheless, given the current circumstances, even these measures may turn to be insufficient for survival of many companies, especially in the small and medium businesses segment.
