Summary
The sector of small and medium-sized enterprises is lately under immense pressure due to restrictive governmental response to the COVID-19 pandemic. One of the dominant issues is concerned with financial liquidity – the threat is large-scale insolvency, job losses in thousands, and disappearance of businesses from local communities. There is a time-tested solution in Spain and Italy that provides liquidity to such enterprises in a democratic manner by establishing employee ownership schemes. In addition to saving businesses, employee-owned firms proved to provide more resilient business structures that better withstand crises. Despite the concerns that such an aid scheme meets the indications of a general prohibition of State aid and is thus illegal, the doubts were scattered by the Commission's decision which offered guidance and clarification. Based on good practice, we propose a universal model that could be legislated in most EU Member States.