Published June 6, 2020
| Version v1
Working paper
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A mechanism to support SMEs in the COVID 19 crisis
Creators
- 1. Austrian Institute of Economic Research (WIFO)
- 2. University of Vienna and WIFO
Description
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 prudent. We discuss potential problems.
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PB_profit_contingent_SME_COVID.pdf
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