Switzerland went into lockdown less than a week ago but for many small businesses that’s already way too long. Panic is setting in as they watch their revenue dry up and their cash pot dwindle.
“Small businesses are currently in survival mode, trying to secure liquidity and upcoming salary payments,” said Ramon Schalch, managing director of the cafe chain ViCAFE, which employs 93 people. Instead of espressos at their coffee bars, these days they’re only making money by selling coffee beans online.
The business is putting all its hopes on “Kurzarbeit,” a government program that would cover 80 percent of employee salaries for companies that shut down because of the health emergency.
Billions on the table
The streets are clearing out after the Swiss government pressed pause on all leisure activities until at least April 19. Shops, restaurants, bars, theaters, gyms, and hairdressers are all closed as the number of coronavirus cases surges.
The Federal Council is expected to present new measures on Friday to cushion the blow for small businesses, which make up the bulk of the economy. Last week, it announced a CHF 10 billion aid package to keep companies afloat. It includes CHF 8 billion for “Kurzarbeit,” or short-time work, and CHF 580 million in guaranteed bank loans.
But some economists say that’s not nearly enough. One proposal put forward by Hans Gersbach and Jan-Egbert Sturm, two prominent professors at ETH Zurich, calls for a CHF 100 billion bailout fund that would be financed in part by the Swiss National Bank.
“What we actually want to prevent is that these firms cease to exist,” said Sturm, director of the KOF Swiss Economic Institute. “We also hope that after the crisis is over, after the epidemic has been dealt with, that these firms can restart their businesses again.”
Businesses demand help
Within cantons, the take-up for aid has been strong. Zurich has received about 8,000 requests related to work stoppages in recent days, the Office for Economy and Labor said Thursday. Geneva said it has received 600 queries about short-time work from companies and about 33,000 from worried employees since last week.
Geneva and Basel are rolling out tens of millions of francs in measures to support local businesses, mainly in the form of guarantees for bank loans.
Carole Chappuis is one of those searching for options. She runs two yoga studios in Geneva and Lausanne with around 30 employees combined.
“We are lucky if we survive,” she said by phone. “We have enough liquidity until the end of April but if it extends any longer, we will have to choose between a line of credit or bankruptcy.”
Zurich-based indoor cycling studio Velocity hopes to avoid laying off employees as a result of COVID-19. “It is sadly unclear from both the government and our insurance provider if there will be any compensation for the complete loss of revenues,” said owner Mallory Nieman.