Is it difficult to obtain loan during short-time work?

Short-time work serves as a temporary reduction in working hours to avoid redundancies. The employees affected by this receive partial wage compensation from the short-time work benefit.

The reason for the introduction of short-time work is mostly a temporary lack of orders; in some fields of activity such as the construction industry, the weather conditions contribute to regular seasonal short-time work. The duration of short-time work is generally a maximum of six months, an increase in this period is possible in individual cases. While large companies partially make full use of the limitation, short-time work in smaller companies mostly lasts from a few weeks to two months.

The income relevant to borrowing during short-time work

The income relevant to borrowing during short-time work

A loan should actually be easy to obtain during short-time work, since the time of reduced employment is limited and the employee will then return to his old income afterwards. In fact, most financial institutions base their household accounts on the last or the past three months’ income alone, without taking special effects such as temporary short-time work into account.

If, as is also widespread, they only include income from their main job and no government benefits such as short-time work allowance in the calculation of repayment ability, a loan is difficult to obtain during short-time work. The safest way to successful borrowing is through a bank that takes all income components including short-time allowance into account when making your credit decisions.

Agreeing on a temporary repayment pause is ideal for a loan during short-time work, as it postpones the start of repayment until the point in time when the employee returns to full employment.

Apply for the loan in good time

Apply for the loan in good time

In many companies, there are clearly visible signs of the difficult order situation and an impending short-time phase. This is particularly true in the construction industry, whose employees go through a phase of short-time work of varying lengths depending on the weather in almost every winter. Applying for a loan in time avoids the need to apply for a loan during short-time work.

When calculating the monthly installments to be paid, the borrower takes into account that he is likely to have a reduced income for a few months, so that he chooses a long loan term and correspondingly low monthly charges. An ideal is a loan agreement with the right to make special repayments or to change the monthly installments, which can be used to increase the monthly loan repayment after the end of the short-time work phase.

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