The repayment of billion of Swiss francs in emergency loans last year to cope with the pandemic is rankling Switzerland's small business sector.

The lobby of Swiss banks issued recommendations recently on the repayment of a glut of cheap loans to small business last year to shore up the domestic economy when the pandemic broke out. Specifically, it told banks that «amortization payments for COVID-19 loans of up to 500,000 Swiss francs shouldn't be introduced this year, but beginning March 31, 20220.»

The financial lobby considers this a huge concession to small businesses still hurting – which infuriated the association representing 500,000 small businesses in Switzerland, as Sunday tabloid «Sonntagsblick» (in German) reported.

Pathos Vs Business

The introduction of repayments from next year is «an affront to small business,» their lobby said. The group had accused their lenders of breaking promises made during the crisis.

«Just last year, bank representatives assured us with great pathos that they wanted to contribute to managing the crisis at no benefit to themselves by granting the loans. They are now reneging on this promise at the expense of small business,» according the the letter, signed by Fabio Regazzi and Hans-Ulrich Bigler, the lobby's president and director, respectively.

The Swiss Bankers Association rejected the allegations. «Banks have the right to introduce a schedule of amortization during the eight-year loans period according to the loan agreement between the debtor. The credit terms are transparent and clear for both sides,» a spokeswoman said.

Extending Loan Terms

The dispute puts a blemish on what was in March of last year one one of the fastest, least bureaucratic lending bonanzas by a government during COVID-19. The Swiss government agreed to fully back credit by Swiss banks, while the central bank and Swiss financial regulator eased capital requirements on lenders.

Banks actually began requesting amortization of the loans earlier this year, which led to protests by major industries like hospitality. The banking association then told its members to hold off on beginning to call the loans until April 2022, and to extend the loan period to eight years, from originally five.

Switzerland expects a swift-ish recovery to its economy from the pandemic, it said last month when raising its growth forecast for this year to 3.6 percent.