Unlike other major health crises that preceded it, the COVID-19 pandemic ground social and economic activity around the world to a near halt. Governments all over the world were grossly unprepared to properly respond to the health and economic crisis. In many countries, the public health crisis devastated economies to post-war levels.

According to the World Bank, small and midsize companies represent 90% of all businesses and more than 50% of employment worldwide. The worldwide COVID-19 shutdown proved just how important government support programs—like the ones that follow— are for small business enterprises (SBEs).


The Paycheck Protection Program, employee retention credit, and Economic Injury Disaster Loan were among the first and most critical measures the U.S. government took to support small businesses. These three types of measures—employment protection, tax credit or deferral, and financing—were the strategies many governments around the world implemented to support SBEs.

Further measures, such as the Restaurant Revitalization Fund, Shuttered Venue Operators Grant program, and carrying back 100% of operating losses, were also introduced during 2020 to support small businesses through a period of severe disruption.


Employment-related measures in the U.K. included the Coronavirus Job Retention Scheme, Statutory Sick Pay, and the Self-Employment Income Support Scheme (SEISS). The Job Retention Scheme, also known as the furlough scheme, was applicable to all employers and employees who were on payroll as of February 28, 2020, and paid through the PAYE withholding system, which collects payroll taxes and national insurance. This scheme ended on September 30, 2021.

The equivalent of the furlough scheme for the self-employed was the SEISS. The program was effective May 13, 2020, and paid 80% of monthly sales for three months, up to £7,500. This scheme had five rounds with varying terms and ended on September 30, 2021.

Tax-deferral measures included a deferral of value-added tax (VAT) payments during the period of March 2020 through June 2020. Businesses could either pay this amount in full by March 2021 or opt into a new VAT payment scheme.

Low-interest loans include the Bounce Back Loan Scheme, the COVID-19 Corporate Financing Facility, the Coronavirus Business Interruption Loan Scheme, the Future Fund, and the Trade Credit Reinsurance Scheme. The Bounce Back Loan Scheme allowed SBEs to borrow up to 25% of their sales for a maximum of £50,000. The loan was 100% guaranteed by the U.K. government, had an interest rate of 2.5%, and deferred all fees and interest for 12 months. The program ended March 31, 2021.

To further encourage lending to SBEs, the U.K. implemented the Coronavirus Business Interruption Loan Scheme, through which the first year of interest was fully paid and 80% of the loan was backed up by the government. The maximum was £5 million, and only SBEs with annual sales of no more than £45 million were eligible. The program also ended March 31, 2021.


In Germany, employment measures included short-time allowance, exceptions to the applicable working hours established by the Working Time Act, and increased supplementary income limits for retirees.

Effective March 1, 2020, private and public companies experiencing lack of work for at least 10% of their workforce were eligible to apply for short-term work support. This measure covered up to 60% of missing salaries and up to 67% of salaries for working parents. Employers were eligible to receive government support up to 21 months and could be fully reimbursed for contributions to social security. The allowance increased to 70% or 77% after the fourth month of short-term work and to 80% or 87% after the seventh month of short-term work. The receipt of short-term allowance didn’t affect the eligibility period for unemployment benefits. This measure expired on December 31, 2021.

Germany also introduced exceptions to the Working Time Act. This regulation outlines maximum working hours, rest period, and the employment bans on Sundays and public holidays. The exceptions allowed essential workers to work more and to be paid accordingly. Tax-deferral measures included deferral of VAT and payments of income and corporate tax, as well as suspension of late payment charges on tax debts.

To help the restaurant industry, the VAT rate was reduced from 19% to 7% for one year, effective July 1, 2020. SBEs were allowed to offset 2020 losses against 2019 tax prepayments. Various loans were provided by KfW (a German state-owned development bank), including an entrepreneur loan, a start-up loan, and loans with an accelerated approval process for midsize companies (also known as quick loans).

The start-up loan was for companies established within the five years prior to COVID-19. The German government would assume 80% risk and lend up to €200 million. The entrepreneur loan had similar terms but was for companies established more than five years prior to COVID-19. The quick loans allowed profitable SBEs with at least 10 employees that were in business since at least January 1, 2019, an accelerated approval process to receive a loan. SBEs with fewer than 50 employees were eligible to receive up to €500,000 and those with more than 50 employees up to €800,000.


The Chinese government introduced a series of subsidies and tax reduction policies, including social security reductions and exemptions, job training, corporate recruitment subsidies, subsidies for hiring elderly unemployed persons, tax exemptions, and exemptions for procurement within administrative jurisdictions. Every small business in China makes contributions to five types of insurance, so the Chinese government also introduced subsidies to help SBEs in making those contributions. Rent-free office spaces were made available for state-owned enterprises, as well as subsidies and support policies such as quotas for epidemic prevention materials. These policies have played an important role in enhancing corporate confidence, stabilizing the workforce, and reducing pressure on cash flow, but larger organizations had more access to information. SBEs sometimes missed the timely application of subsidies due to this lag of information. Hence, some SBEs keep close contact with their sister companies, exchange information with each other, and keep abreast of various government policies.

Overall, small businesses around the globe were severely impacted by the pandemic, demonstrating how critical governmental support is to the economy. It’s difficult to say which country had the most success managing the crisis. While the disruption forced many small businesses to close, it also pushed SBEs to be more creative and leverage new opportunities. Adoption of new technologies, working remotely, skill building, and focusing on safety measures have all become a part of the new post-pandemic business model. In the end, the small businesses that survive the pandemic will come out better and stronger.

Special thanks to Yi Zhang, CMA, CSCA, a member of the IMA Global Board of Directors, for her contribution on Chinese government support to small businesses.

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