1. Framework

The Corona Aid Fund (“Corona-Hilfs-Fonds”) provides guarantees, direct loans and direct grants to affected companies. A precondition for the use of financial measures is that the company has its registered office or a permanent establishment in Austria and that it carries out significant operational activities in Austria. Furthermore, the company must not already be in difficulty on 31 December 2019 under the EU Block Exemption Regulation.

a.) Eligibility condition “company in difficulty”

According to this regulation, a company is a “company in difficulty” if at least one of the following circumstances applies to it:

  • Loss of more than half of the share capital or nominal capital in the case of limited liability companies or joint stock companies. Excluded:
      • small and medium-sized enterprises (i.e. fewer than 250 employees and either an annual turnover not exceeding EUR 50 million or an annual balance sheet total not exceeding EUR 43 million) which have been in existence for less than 3 years
      • small and medium-sized enterprises in relation to risk financing aid in the 7 years following their first commercial sale, which are eligible for risk financing after due diligence by the selected financial intermediary


  • Loss of more than half of the equity capital in the case of general partnership or limited partnership (except for the same small and medium-sized enterprises as in the case of GmbHs and AGs)


  • Company is subject of insolvency proceedings or fulfils the conditions for the opening of insolvency proceedings at the request of its creditors.


  • Company has received rescue aid and the loan has not yet been repaid or the guarantee has not expired or the firm has received restructuring aid and is still subject to a restructuring plan.


  • Company which cumulatively meet the following criteria in the last 2 years (except small and medium-sized enterprises):
      • book value-based debt-equity ratio of the enterprise exceeds 7.5 and
      • the company’s interest coverage ratio calculated on the basis of EBITDA was less than 1.0


b.) Calculation of the loss of more than half of the equity

Especially the first criteria is relevant for Start-ups (in the form of a GmbH), due to start-up losses in the early phase. Such a loss of more than half of the equity capital is the case when, after deducting the accumulated losses from reserves (and “all other elements that are generally attributed to the company’s equity”), there is a negative cumulative amount corresponding to more than half of the subscribed share capital.

In this context, it was in particular question which items were included because of the reference to “other elements which are generally considered to be part of the company’s own funds”. A calculation table published by AWS on the determination of whether a company is in difficulty shows how the capital of a company limited by shares should be calculated, taking into account the “other elements” referred to above (see https://www.aws.at/aws-garantie/ueberbrueckungsgarantie/ergaenzende-downloads/).

The AWS calculation table is as follows:

While own funds in the narrower sense refer to traditional own funds, the calculation table also shows which components are allocated to other liabilities with the character of own funds. In this context, therefore, shareholder clearing accounts, subordinated loans and silent participations can also be allocated to own funds. While, for example, shareholder loans (regardless of whether they are subordinated or actually converted into equity) are counted as own funds, loans which are not granted by shareholders must at least be subordinated for inclusion in the own funds calculation (this may apply to convertible loans in the start-up sector, for example).


c.) Example calculations


Share capital                            TEUR         35
Balance sheet loss                  TEUR       – 20
Equity                                        TEUR         15
(there are no shareholder loans etc.)

 → Company in difficulty (because TEUR 15 < half of TEUR 35)


Share capital                            TEUR         35
Balance sheet loss                  TEUR       – 10
Equity                                        TEUR         25
(there are no shareholder loans etc.)

 → No company in difficulty (because TEUR 25 > half of TEUR 35)


Share capital                             TEUR         35
Balance sheet loss                    TEUR    – 200
Gesellschafterdarlehen           TEUR       200
Adjusted Equity                        TEUR         35

 → No company in difficulty (own funds TEUR 35 > half of TEUR 35)


Share capital                              TEUR         35
Balance sheet loss                    TEUR    – 200
Shareholder loan                      TEUR       100
Adjusted Equity                        TEUR       – 65

 → Company in difficulty (own funds are negative)


2. Outlook


Taking these aspects into consideration, certain measures are already available to start-ups. Nonetheless the further development remains to be seen.

Apart from that the Austrian government recently presented an aid package to support start-ups in coping with the corona crisis. In concrete terms, there are to be two funds (whereby further details should be published promptly):

  • A COVID-19 aid fund of EUR 100 million. In this context innovative start-ups that have run into financing and liquidity problems as a result of the corona crisis are supported with an AWS (Austria Wirtschaftsservice) grant for private investments. AWS doubles fresh equity invested in Austrian start-ups.
  • A private venture capital fund of EUR 50 million. In this context an AWS capital guarantee is used to mobilise additional risk capital. A call for tenders is used to select one or more private fund managers to set up venture capital funds with an investment focus on Austrian start-ups. In order to mobilise investors who have provided fresh money for these funds since the outbreak of the COVID crisis, AWS provides a capital guarantee of up to 50 % of the fund volume.




Christoph Puchner, Managing Director and Tax Advisor & David Gloser, Partner, Chartered Accountant and Tax Advisor from ECOVIS Austria