In order to mitigate the negative economic affects of the COVID-19 pandemic and avoid credit market disturbances, the Hungarian National Bank (MNB) announced the launch of the NHP Hajra Programme on 20 April.
According to this programme, the MNB will provide funds of up to HUF 1.5 trillion to credit institutions for new investment, working capital and refinancing loans, and for the pre-financing of certain EU subsidies, with 0% interest and a maximum maturity of up to 20 years (for working capital loans, three years).
To be eligible, credit institutions are required to have concluded the relevant framework agreement with the central bank before 29 May 2020.
Similar to previous programmes, participating credit institutions and financial enterprises can only provide loans and financial leasing to small and medium-sized enterprises (SMEs) and are only entitled to transfer their contracts concluded within the framework of the programme.
Utilisation under MNB refinancing loans can begin on 21 April 2020 and the availability period may last three years from the date of the relevant SME contract, provided that the first utilisation takes place within the first 1.5 years.
The minimum loan amount that can be granted to SME borrowers under the programme is between HUF 1 million and HUF 20 billion, with a fixed margin of 2.5% annually, which – similar to previous programmes – includes yearly fees and other costs that may be charged by the credit institution.
An important change to previous years is that the credit assessment procedure should not exceed ten business days in total, following the receipt of the complete loan application. Should the relevant credit institution fail to complete the process within this deadline, another lender will receive the right to evaluate the relevant application.
The new programme enables working capital financing (which was not allowed under the previous programme NHP Fix) and the pre-financing of certain EU subsidies, standard aid SMEs are already entitled to but have not yet received. Furthermore, a SME is also entitled to the refinancing of Hungarian forint- or foreign currency-based investment loans or financial leases from domestic credit or financial institutions provided that the original agreement was concluded before 1 January 2020 at the latest.
Credit institutions can offer their claims arising from SME loan documentation to MNB, but such collateral will be accepted by the MNB at a discount rate, thus additional collateral shall be provided to cover the central bank's entire claim. Alternatively, the MNB accepts certain treasury securities held in securities accounts with KELER Zrt. and deposited for the benefit of MNB. Similar to previous programmes, the MNB does not accept collateral claims arising from SME contracts that include security deposits in excess of HUF 20 million.
The programme explicitly allows for the restructuring of a SME loan, and states that the restructuring does not entail the repayment of the MNB refinancing loan.
If you have further questions about this programme, contact your regular CMS advisor or local CMS experts: