“Interest Rates on Pandemic Loans Increased by Government and Cantons”

During the pandemic, the federal government and the cantons each granted loans to distressed companies with their own programs to ensure their economic survival. Now the interest rates on the funds that have not yet been repaid are being increased.

The Federal Council took the first step at the end of March. Since then, he has been collecting interest of 1.5 percent for loans of up to CHF 500,000 (previously interest-free). For amounts above this (previously 0.5 percent) it is 2 percent.

Now the canton of St. Gallen follows. From June 1, both the loans secured by joint and several guarantees (previously 0.5 percent) and those from the hardship program would be increased uniformly to 1.5 percent, according to the canton’s announcement on Tuesday.

For the St. Gallen government, the increase is “appropriate and necessary”. In doing so, she wants to create an incentive “not to claim the loans for longer than is necessary”. In addition, “any false incentives” should be counteracted with interest rates in line with the market.

At the beginning of May, the SP parliamentary group submitted a proposal on the subject of Covid loans, which has now been answered indirectly with the interest rate hike. Among other things, the parliamentary group wanted to know from the government how they assessed the increases by the Federal Council.

Apparently it is assumed that the companies are able to repay the money, wrote the SP. In fact, the effects of the pandemic for companies with low profit margins are “partly still noticeable”. The rise in prices is putting pressure on these companies in particular. Company bankruptcies rose sharply in the first three months of this year.

(sda)