Following the completion of the first round of government subsidies for companies affected by the COVID-19 crisis, the second round of state aid is now being implemented. The Slovak government organisation supporting public and private investments in strategic sectors in Slovakia, Slovak Investment Holding (SIH), prepared the next programme of financial assistance to secure guarantees for Slovak banks, which are to provide favourable loans to companies. EXIMBANKA SR, the Slovak government’s export-credit agency, is in the process of preparing bridge loans to help maintain operations, employment, as well as investments for small and medium-sized enterprises.
SIH financial guarantees mechanism
The programme consists of guarantees issued to Slovak banks for providing preferential bridge loans to companies with a maturity of 2 to 6 years and a maximum loan amount of EUR 2,000,000. Eligible companies will able to use credit resources to finance their operational and investment needs in order to maintain employment. SIH’s guarantee instruments, national development funds NDF I and NDF II which facilitate financial resources from the EU Structural and Investment Funds, will take over 90% of the credit risk of new loans provided by banks to companies.
Based on the feedback from a stakeholder consultation on the terms of the financial instrument, SIH published a call for expressions of interest aimed at financial institutions w/c 22 June 2020.
SIH, which will provide guarantees for most of the loans, will finance the guarantees from Euro funds first before using financial resources from the government budget. EXIMBANKA SR, on the other hand, will finance the guarantees from the government budget directly.
There will be altogether five guarantee programmes in Slovakia to help companies affected by the COVID-19 crisis. The first three programmes authorised by the European Commission brought forth the Temporary State Aid Framework. The Slovak Guarantee and Development Bank (SZRB, a.s.), EXIMBANKA SR and SIH launched the programme according to the de minimis scheme earlier this year (in line with the old rules). The large scheme, announced by the government, is however already governed by the new temporary framework rules issued by the European Commission.
The comprehensive guarantee programme, negotiated between the lenders and the government over a long period of time, will be different, especially in terms of liability. The temporary state aid framework allows the government to guarantee up to one 100% for loans up to EUR 800,000.
In Slovakia, a 90% guarantee has been applied for the loans up to EUR 2,000,000 to be provided by SIH. For larger loans, the guarantees will be provided by EXIMBANKA SR and guaranteed up to 80% of the loan amount.
EXIMBANKA SR financial guarantees mechanism
EXIMBANKA SR will cover up to 80% of the total amount of high-value loans with an interest rate of between 1.9 and 3.9%, depending on the size of the company and the amount borrowed. EXIMBANKA SR has just prepared and launched the programme, calling it the "anti-corona guarantee". All banks domiciled in the Slovak Republic or branches of foreign banks authorised to provide loans in the Slovak Republic will be able to apply. Based on the guarantee provided by EXIMBANKA SR, commercial lenders will be able to provide loans on more favourable terms and EXIMBANKA SR will assume up to 80% of the credit risk for loans provided to companies participating under this programme.
The aim of this financial instrument is to help companies with financial difficulties caused by the current situation and maintain employment through the provision of new bridge loans. The loans will have a maturity of 2 to 6 years, and it will be possible to defer the repayment of equity and interest during the first year. The provision of these loans will not be restricted to certain industries and companies will be allowed to use credit resources to finance their operational as well as investment needs.
EXIMBANKA SR, like Slovak Investment Holding, collected feedback and suggestions from key market players and recently published a call for expression of interest in this programme.The comprehensive guarantee programme, negotiated between the lenders and the government over a long period of time, will be different, especially in terms of liability. The temporary state aid framework allows the government to guarantee up to one 100% for loans up to EUR 800,000.
In Slovakia, a 90% guarantee has been applied for the loans up to EUR 2,000,000 to be provided by SIH. For larger loans, the guarantees will be provided by EXIMBANKA SR and guaranteed up to 80% of the loan amount.
EXIMBANKA SR financial guarantees mechanism
EXIMBANKA SR will cover up to 80% of the total amount of high-value loans with an interest rate of between 1.9 and 3.9%, depending on the size of the company and the amount borrowed. EXIMBANKA SR has just prepared and launched the programme, calling it the "anti-corona guarantee". All banks domiciled in the Slovak Republic or branches of foreign banks authorised to provide loans in the Slovak Republic will be able to apply. Based on the guarantee provided by EXIMBANKA SR, commercial lenders will be able to provide loans on more favourable terms and EXIMBANKA SR will assume up to 80% of the credit risk for loans provided to companies participating under this programme.
The aim of this financial instrument is to help companies with financial difficulties caused by the current situation and maintain employment through the provision of new bridge loans. The loans will have a maturity of 2 to 6 years, and it will be possible to defer the repayment of equity and interest during the first year. The provision of these loans will not be restricted to certain industries and companies will be allowed to use credit resources to finance their operational as well as investment needs.
EXIMBANKA SR, like Slovak Investment Holding, collected feedback and suggestions from key market players and recently published a call for expression of interest in this programme.
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