This article will help you:

• Understand the repayment terms of the COVID repayable advance

• Anticipate deadlines and avoid the risk of enforced recovery

• Identify available solutions in case of financial difficulty

• Access resources to manage your obligations with clarity and control

Key repayment terms to understand

• Total amount allocated: the Luxembourg State granted several tens of millions of euros to SMEs in the form of repayable advances.
• Non-adjustable repayment: unlike a bank loan, it is not possible to renegotiate or reschedule the outstanding amount with the Ministry of the Economy.
• Fixed deadlines: repayment follows a pre-established schedule. Failure to comply with these deadlines may lead to significant consequences.

Risk of enforced recovery: what you must avoid
Official reminders
In the event of late payment, the company receives official reminder letters from the Ministry of the Economy, sent to its registered office. These reminders are spaced over several weeks or even months to allow the business owner time to respond.
After several unanswered reminders, and if the entrepreneur has not come forward, the file is transferred to the Direct Tax Administration (Administration des Contributions Directes – ACD).From that moment:

• the total outstanding amount generally becomes immediately due, unless a repayment plan is negotiated with the administration (which is complex to obtain in practice);
• the advance is reclassified as public debt;
• bankruptcy proceedings may be initiated by public creditors, who are legally entitled to summon the company before the court for unpaid public debt (the ACD is one of them).

Expert insight: how to avoid this situation?
“Never ignore an official reminder letter. Contact the Ministry as soon as you anticipate payment difficulties. Communication is essential. If possible, pay at least part of the outstanding amount to demonstrate good faith. At the same time, work with experts to develop an action plan to restructure your cash flow and avoid the conversion into public debt.” — Guylaine Marchi Hanus, Founder of EIS.

What solutions are available if you are struggling to repay?

If you are facing difficulties in meeting your repayment obligations, several options may help ease pressure on your cash flow and reduce the risk of enforced recovery.

• Appoint a conciliator

A business conciliator can support you in managing your financial situation and help negotiate with creditors to prevent escalation. Conciliation allows you to anticipate issues and structure a tailored recovery plan.
In brief, the conciliation procedure is initiated at the request of the entrepreneur through the Ministry of the Economy. The entrepreneur may propose a conciliator; the Ministry appoints the conciliator and validates the scope of the mission.

• Request a credit facility

Another option is to obtain a short-term credit line to refinance the outstanding amount. You may consult the Mutualité de Cautionnement (MC), which can facilitate access to bank financing by guaranteeing part of the loan.

• Explore amicable or judicial restructuring procedures

The House of Entrepreneurship provides a detailed free guide to help SMEs prevent and manage financial difficulties, along with free initial information.
It is important to know that solutions exist outside of court proceedings, allowing confidential negotiation with public or private creditors when financial difficulties are still manageable and can be addressed proactively.

Anticipate and structure your cash flow to avoid tension: the best strategy remains anticipation. Three practical measures:

• implement regular cash flow monitoring: a dashboard will help you identify liquidity needs well in advance.
• Plan repayment deadlines within your financial forecasts: avoid letting upcoming instalments disrupt your cash flow unexpectedly.
• Contact financial partners at the first signs of difficulty: the earlier you act, the more options remain available.