A mechanism to support SMEs in the COVID 19 crisis

Werner Hoelzl, Philipp Schmidt-Dengler
2020 Zenodo  
We propose a mechanism - "profit-contingent repayable grants" - to support SMEs in the COVID 19 crisis. We argue that the mechanism can be implemented quickly, in a targeted way and with low administrative costs. The mechanism is characterised by a) profit-contingent repayment, b) limited repayment period (forgiveness), c) interest at market rates and d) administration by the tax authorities. Such a mechanism can provide an equity-like support for many SMEs that is both efficient and fiscally
more » ... ient and fiscally prudent. We discuss potential problems.
doi:10.5281/zenodo.3881501 fatcat:jbkyornf4nd75a7qqdlv4jlawa