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Monday, July 4, 2022

Loan guarantee scheme uptake at 1%

Out of two billion euro in state loan guarantees offered to businesses as a stimulus measure passed in April to revive production in the wake of the Covid-19 outbreak, only about 1% has been tapped.

 

Data from SID Bank, the state-run export and development bank which is responsible for the implementation of the scheme, show that since the scheme became operational in mid-July, a total of EUR 21 million worth of state guaranteed loans have been approved.

Out of those, contracts have been signed for principals worth EUR 16.9 million loans, with a further EUR 4.1 million loans approved.

The scheme was enacted as part of the stimulus package passed in late April designed to supply businesses with much needed liquidity, but it did not become operational until mid-July, partly because of issues raised by banks.

Under the law, companies can take out loans from banks equalling to up to 10% of their annual revenue in 2019 with the state providing the guarantee.

State guarantees for loans to SMEs can equal to up to 80% of the principal and those for large companies up to 70% of the principal.

The scheme is managed by SID Bank on behalf of the state, and commercial banks receive the guarantee as soon as they close the loan contract that meets all the requirements of the act and implementing regulations.

SID Bank is also overseeing the implementation of the law allowing deferral of loan repayments which was passed by parliament in April. The state guarantees for liabilities of borrowers who are approved a one-year deferral of payment obligations due to the pandemic.

Out of the EUR 200 million available in guarantees for such deferrals, EUR 54.9 million in guarantees had been approved until 31 July, SID Bank said.

State guarantees under both acts are available until 31 December.

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