State bonus for serviced corporate loans

The bill on the state subsidy for corporate loan repayment tranches provides for a significantly reduced contribution to the installments for loans that banks have denounced, compared to loans that are properly serviced.

The draft law on the “Gefyra 2” program for the state to subsidize loan tranches owed by companies and self-employed professionals was tabled in Parliament late on Monday. It provides for the optional coverage of most of each tranche’s amount for the next eight months.

According to the bill, the state subsidy will start by covering 90% of the monthly tranche for consistently paying enterprises and ease up to 70% during the eight-month period; meanwhile, for companies that have delayed the repayment of their loans, the subsidy will start from 80% and drop to 60% by the end of the year. The state subsidy for the repayment of bad loans denounced by the banks will however be significantly smaller, starting from 50% before shrinking to 30%. A necessary condition is for those loans to have been denounced after December 31, 2018, while borrowers must have first had their loans rearranged with their creditors within the set deadlines.

Gefyra 2 allows for the inclusion of active micro, small or medium-sized enterprises – i.e. employing up to 250 people with a turnover up to 50 million euros or a sum of annual financial accounts up to €43 million based on their latest report. It also allows for the inclusion of self-employed professionals.

Applicants must prove they have suffered an annual turnover decline of at least 20% and have been included in the provisions of one of the measures implemented to ease the pandemic’s economic impact.

Eligible corporations will also include companies active in the utilization of property assets whose rents have been reduced by government order, shareholders in personal companies whose operations have been suspended due to Covid restrictions or which have received some other form of state support, as well as those that have received a state loan through the “Deposit To Be Returned” program or have workers whose contracts have been suspended for pandemic-related reasons. The eligibility criteria also provide for ceilings on the value of debtors’ property asset, deposits and debt level.