Coronavirus Stimulus Packages Around the Globe

In addition to direct lobbying for the fitness industry in the U.S., IHRSA is collating information on stimulus packages around the globe. We are pleased to report that many governments have:

• Passed measures to provide financial relief to the hard-hit health and fitness club industry and their staff, as well as broader measures to support all business. They have also proved willing to amend original packages, to further increase relief.
• Added further finance and areas of accessing finance by way of grants and/or loans.

In this article, we will select the areas of most relevance for health club owners, operators, and industry suppliers of how best to access these loans and grants. In looking at the available stimulus packages in your city, state, province, or country, we also recommend doing a thorough analysis of your club’s expenditure. Taking note of financial pressures will assist in identifying the areas where grants or loans are needed. Once completed, focus on the areas of the stimulus package in priority order.

Larger companies will generally have more resources to deploy for loan and grant applications. Still, conversely, in several countries such as the U.S., Canada, the U.K., and elsewhere, stimulus packages at present have mostly targeted smaller businesses. IHRSA, with support from its ILC (Industry Leadership Council) members, increased lobbying efforts in the U.S. to seek further relief for the whole industry. In a recent article, we include a recap with updates on IHRSA’s lobbying efforts, which is available for adaptation in other countries.

So, based on discussions online, offline, and from IHRSA’s new forum: What have we learned are vital areas to be included or expanded in stimulus packages around the globe?

Relief Regarding Rent/Mortgages

A significant expense for most businesses and financiers is rent, and landlords have been very mixed in their support throughout different jurisdictions.

In China, landlords are not providing rent-free periods at this point. However, all clubs are in negotiations with their landlords.

In Australia, the federal government has put a temporary halt on evictions over the next six months. This prohibition is specifically for commercial and residential tenants in financial distress and unable to pay their rent due to the impact of coronavirus. There are also some rent relief measures.

In Spain—although not yet approved—the government is proposing to subsidize part of the rents that support sports facilities.

The German federal government has stated that tenants do not have to pay rent for three months, but this amount will be prorated in two years.

In most countries, commercial tenants, landlords, and financial institutions are encouraged to sit down together to find a way to ensure that businesses can survive. There are various recommendations published by different governments. We have taken the Australian federal government’s standard set of mandates as an example. These principles are to underpin and govern intervention to aid commercial tenancies as follows:

• A short-term, temporary moratorium on eviction for non-payment of rent to be applied across commercial tenancies impacted by severe rent distress due to coronavirus;
• Tenants and landlords are encouraged to agree on rent relief or temporary amendments to the lease;
• The reduction or waiver of rental payment for a defined period for impacted tenants determined by the parties involved;
• The ability for tenants to terminate a lease and/or seek mediation or conciliation on the grounds of financial distress;
• Commercial property owners should ensure that any benefits received in respect of their properties should also benefit their tenants in proportion to the economic impact caused by coronavirus;
• Landlords and tenants not significantly affected by coronavirus are expected to honor their lease and rental agreements;

IHRSA has also produced specific information on negotiating with landlords.

Relief Regarding Staffing

A sizable number of countries have either enhanced unemployment benefits or introduced special COVID-19 payments directly to those who have been laid off temporarily due to the pandemic. From an employer perspective, the wage subsidies are of most interest as they enable staff to remain on the payroll. The types of subsidies and requirements are quite different around the globe. And due to the rush in creating these allowances, some governments are recognizing anomalies and restrictive measures.

• New Zealand is providing a wage subsidy of up to $585 per week for 12 months, the most prolonged period we are aware of, while most countries allow up to three months at present.
• In Australia, there is payroll tax relief.
• The Austrian government is covering 90% of salaries, with clubs covering the other 10%.
• The Belgian government has extended temporary unemployment until June 30, with subsidies increasing from 65% to 70%.
• In Luxembourg, employees will receive 80% of their salary or up to a maximum €2,500 per month.
• The German government is paying 60% of employees’ salaries.
• Ireland has increased wage subsidies to employers from 70% to 85% for low paid workers, with a payment of €350 per week up to a maximum of €410. Employers are encouraged to top up these payments, but there is no compulsory requirement.
• Other countries providing wage or salary subsidies include the U.K., France, and Denmark of up to 80%.
• The Canadian government initially paid $2,000 for all workers, before a wage subsidy covering 75% of salary, up to $58,700, was introduced on March 30, if the company lost 30% of revenue.

In the United States, the federal government has introduced the Paycheck Protection Program (PPP) through the Small Business Administration (SBA). This program is to help small businesses keep employees on their payroll during the business shutdowns due to the pandemic. The SBA will forgive these loans if all employees remain on the payroll for eight weeks, and the money goes toward costs of payroll, rent, mortgage interest, or utilities. New applications for the program are on hold due to a lack of funding. The expectation is that Congress will approve new funding for the program this week. (The Senate has already approved additional funding and is expected to be approved by the House and be signed into law this week.)

In terms of availing of these subsidies, companies who are applying must ensure all conditions are and will be satisfied. For example, where conditions state that all employees with subsidized wages are to remain employed until a specific date, the company needs to ensure that they have sufficient finances to do so. Failure to do that could result in repayment of the loan or grant. This is especially important in reviewing the staffing requirements at the intermediary phase—in an example, initial reopening with minimal facilities or services until a vaccine is widely available.

Applying for Grants

All companies must become familiar with the grant application process and act fast, as there are limits in most countries. For those unfamiliar with grant applications, we advise you to consult with an IHRSA national federation partner or discuss with other clubs or suppliers to ensure all necessary procedures. Very often, the rejection of grant applications is due to not following the correct methods. Use the IHRSA Forum to reach out for the support of others in your country.

In Australia, we have seen the introduction of small business grants.

The Canadian government announced on April 16, the intent to introduce the Canada Emergency Commercial Rent Assistance (CECRA) for small businesses. The CECRA seeks to provide loans—including forgivable loans—to commercial property owners who will lower or forgo the rent of small businesses for April (retroactive), May, and June. Local, provincial, and city governments are providing little support for small- to mid-size enterprise (SMEs), but nothing specifically for the fitness industry. Exploring tax-free periods and low-interest loans from banks is in the works. Still, landlords are NOT providing rent-free periods at this point, although all clubs are in negotiations with their landlords.

In China, local, provincial, and city governments are also providing little support for SMEs, but nothing specifically for the fitness industry. Again, tax-free periods and low-interest loans from banks are ongoing.

Loans & Deferral of Payments

We have included payment deferrals under this section also, as they are existing loans, and payment is to be collected. The Austrian government is giving up to €500,000 in a secured loan for each business that qualifies. However, liability will be on the companies, and banks are offering different rates for this. In Australia, a cashflow boost is available to businesses through Business Activity Statements, providing a minimum of $20,000 to up to $100,000 to businesses. Banks are offering a $250,000 loan to SMEs where 50% of the loan is secured by the government.

In a recent meeting between the Belgian government and banks, Belgian banks agreed to grant a deferral of payment for “viable” enterprises until September 30—without additional costs.

The Canadian government’s announcement on April 16, is an example of positive changes to help more businesses. Canada is expanding the Canada Emergency Business Account (CEBA) for businesses that paid between $20,000 and $1.5 million in total payroll in 2019. This new range will replace the previous one between $50,000 and $1 million. It will help address the challenges faced by small businesses to cover non-deferrable operating costs. Since the launch of the CEBA on April 9, 2020, more than 195,000 loans have been approved by financial institutions, extending more than $7.5 billion in credit to small businesses.

The Swiss government is offering free loans up to €500,000 for every company that wants them. However, these are repayable loans, unlike in countries such as the U.S., which is offering loan forgiveness for conditions met on specific programs, as part of the $2 trillion stimulus package.

Business Interruption Insurance

Business interruption insurance (BII) protects against losses caused by the disruption of business operations due to a hazard or peril. BII allows a business to recover revenue lost during the time shut down. A handful of these policies contain a civil authority clause that covers revenue loss if the government denies access to the business. Businesses shut down due to the COVID-19 pandemic would seemingly be covered under these policies. However, many insurance agreements contain language excluding coverage for viruses after another coronavirus, specifically the SARS (severe acute respiratory syndrome) epidemic, spread across the world between 2002 and 2004.

The Chinese government has begun directing its domestic insurance providers to sell business interruption policies to provide coverage for lost revenues during the pandemic. These policies support restarting production and work within the Chinese economy after the lockdown to contain the spread of the coronavirus.

In the United Kingdom, the government has acknowledged that most insurance policies bought by businesses do not cover interruption caused by COVID-19. Yet, the Financial Conduct Authority (FCA) has strongly encouraged insurers to pay out the policies that do. In a letter to heads of insurers, FCA Interim Chief Executive Christopher Woolard said, “While this may be disappointing for the policyholder, we see no reasonable grounds to intervene in such circumstances.”

Examples of Additional Resources from IHRSA and National Federations:

1. The ultimate global resource for articles, webinars, online forum, and more.
2. U.S. Federal and State Resources
3. How IHRSA is showing support for the fitness industry and the World Health Organization.
4. How Australia is supporting people at home.
5. Industry specific resources and webinars
6. Exercise New Zealand
7. Ireland Active