Coronavirus - Overview of governmental economic support – Global

Global

Banking and finance
Coronavirus - Country overview
Financial services

21-05-2020

Please note that further information is expected and we will update this note when this is available.

Set out below is a summary of measures that have been announced by governments in various jurisdictions in response to the COVID-19 outbreak. Please note that these measures are subject to eligibility criteria which is detailed further on in the note.

Jurisdiction list

Austria
Belgium
China
France
Germany
Ireland
Italy
Netherlands
Norway
Poland
Spain
Sweden
UK
US

Summary table

Jurisdiction	Loans backed by Government Guarantees	Additional Funding	Loan Repayment Deferral	Other
Austria	The government has provided a fund of EUR 15 billion to guarantee for liquidity loans to cover operating expenses. These guarantees may cover 100% of loans for up to EUR 500,000 or 90% up to EUR 120m (of no more than three months turnover). The guarantee may be granted for a period of up to five years and may be extended for another 5 years. An additional fund of EUR 9 billion in total to provide guarantees for existing credits has been created. An additional fund of EUR 2 billion has been created within OeKB to support exporting companies, providing liquidity loans.	To cover operating expenses, the government may provide direct payments of up to EUR 90m for companies suffering from loss of turnover of at least 40% in 2020. The details have not yet been announced. Small and micro enterprises are offered direct payments of up to EUR 2,000 per month for up to three months, at an earlier stage payments were provided of EUR 1,000 to cover living expenses.	Repayments due between 1st April and 30th June 2020 for consumer loans and loans for micro enterprises existing before 15th March 2020 have been deferred by the legislator.	The government has reactivated and updated an existing program of working time reductions, where companies reduce employee working time with the government’s employment agency refunding a large part of the employees’ otherwise lost payment. This applies in combination with employment guarantees for affected employees. Tax and social insurance contribution deadlines otherwise lapsing in spring 2020 applicable to companies operating in Austria have been either extended or the possibility to apply for extension has been implemented. Most measures implemented are combined with employment guarantees for the employees of companies benefitting from such government contributions and guarantees.
Belgium	Guarantee scheme for all new loans and credit lines with a maximum term of 12 months backed by the government and the financial sector for a total amount of EUR 50 billion.	No announcements to date	The financial sector is committed to providing viable companies, self-employed professionals as well as individuals support by deferring payment obligations (principal and interest) of their loans - free of charge - until 30 September 2020.	The different regions in Belgium took separate additional measures.
China	No announcements to date	Low cost special purpose loans to support companies responsible for key materials necessary to control the epidemic.	Encouragement by the People’s Bank of China and the China Banking and Insurance Regulatory Commission to provide micro, small and medium sized enterprises with a deferral of loan repayments.	Reduction in reserve requirements for banks.
France	A EUR 300 billion state guarantee fund to support corporate credit launched on 25 March 2020.	Provision of grants to small businesses, the self-employed and micro-enterprises through the EUR 1 billion solidarity fund financed by the State and the local authorities. The French public investment bank Bpifrance is offering additional funds and loans.	The French banking federation has announced, amongst other things, capital repayment deferral for up to six months and removal of penalties and costs to extend loans.	Extension of payment terms for social contributions/direct taxes and potential for write off of some liabilities. Simplified and strengthened state cover for partial activity Specific provisions for start-ups and for French export companies Specific provisions for the banking sector
Germany	An extension of the current government guarantee schemes to cover working capital financings and investments up to certain limits.	Additional loans available from the German development bank KfW. Additional guarantees to be provided by German guarantee banks.	No announcements to date	Planned suspension of certain director’s liabilities and duties around insolvency. Establishment of an economic stabilisation fund. Changes to consumer loan agreements.
Ireland	The Credit Guarantee Scheme will be available to eligible small and medium sized businesses.	A Strategic Banking Corporation of Ireland Working Capital scheme is available for loans of up to EUR 1,5 million with up to the first EUR 500,000 being unsecured. Loans from MicroFinance Ireland will be increased. A Rescue and Restructuring Scheme to assist vulnerable businesses.	Some deferrals may be available, but will be at the lender’s discretion.	A reduction in the Irish Central Bank’s capital buffer to free up capital.
Italy	A guarantee fund for small-medium enterprises has been extended to 80% of a loan of no more than EUR 1,5 million.	No announcements to date	Suspension for 12 months of payments due to Invitalia for financings granted to eligible enterprises. The Italian Banking Association have encouraged deferral of loan payments for up to one year and extension of loans.	Suspension of certain payments due such as taxes to the tax authority and property taxes.
Netherlands	A small credit corona guarantee scheme for companies with relatively small financing needs.	Bridge financing for start-ups, scale-ups and innovative midsized companies.	Certain lenders have announced an automatic 6 month deferral of repayment obligations for midsized companies.	The subsidy limit for seed capital has been increased. The growth facility scheme has been extended. Re-insurance of short term credit insurances by the government
Norway	Establishment of a state guarantee credit facility for small and medium enterprises, where the state will guarantee up to 90% of eligible loans.	Establishment of a state bond fund to invest in mid- sized and larger companies.	No announcements to date	Reduction in capital buffers for financial institutions. Deferred payment of national wealth tax and payment of tax for quarter 1 of 2020. Reduction in VAT rates and deferred payments of VAT and employers’ national insurance contributions.
Poland	Government guarantee scheme up to PLN 100 billion to cover investment loans and working capital loans accessible to medium and large size companies active in all sectors.	Grants for self-employed up to 90% of the minimum monthly remuneration and unsecured loans up to PLN 5,000 for micro- enterprises. An entity to whom the loan was granted may be relieved from debt repayment upon fulfillment of appropriate criteria. Additional support up to 100 billion PLN by the Polish Development Fund (Polski Fundusz Rozwoju) in form of guarantees, sureties or loans.	The Polish Bank Association (Związek Banków Polskich) has announced, among other things, the suspension of the repayment of principal and interest installments, deferment of repayment of lease instalments and deferment of payments under factoring agreements. It can be seen that the banks who are the members of the PBA are taking the above approach towards the borrowers.	Deferment of the date of payment of an annual perpetual usufruct fee and the facilitation of redemption of monetary receivables related to the real properties owned by the State Treasury. Change in maximum non-interest costs in consumer credit. Extension of the time limit for the issuance of individual tax rulings. Amendments to the Polish Bankruptcy Law - the deadline for filing for bankruptcy does not start and the deadline that has already begun is suspended if the insolvency has arisen due to the epidemic. After epidemic period, the deadline runs again. It is also planned to extend the deadline to file for bankruptcy from 30 days to 3 months from the date of waiving of the epidemic restrictions. Reduction of social security contributions for micro-entrepreneurs and self-employed. The Polish Monetary Policy Council has cut interest rates twice already in the last three weeks.
Spain	The Ministry of Economic Affairs and Digital Transformation will provide guarantees for financing to companies and the self-employed. The Spanish government will provide additional guarantees for the financing of working capital required by unlisted export companies.	New financing through the Official Credit Institute to be available. Loans to be provided for research and development projects for small and medium sized businesses.	No announcements to date	Exemption from stamp duty for any contractual amendments to loans and mortgage loans. Restrictions on transactions relating to foreign direct investments.
Sweden	Government guarantee 70 % of loans totalling up to SEK 75 million per loan.	Guarantees of up to SEK 5 billion to airline companies. SEK 500 billion in loans to banks, to be on-lended to companies. Capital contribution of SEK 3 billion to state owned venture capital company Almi Företagspartner AB. Increased credit guarantees totalling SEK 500 billion from the Swedish Export Credit Agency. Swedish Export Credit Corporation’s credit framework increased from SEK 125 billion to SEK 200 billion.	Up to 12 months deferral possible on new loans which are backed by Government guarantees.	Reduction of social security contributions for employers. Temporary change to rules for tax allocation reserves. Government support for short-term layoffs. Opportunities for companies to defer tax payments. Temporary decrease in rental costs in vulnerable sectors.
UK	The government will provide guarantees of up to 80% through the Coronavirus Business Interruption Loan Scheme and Coronavirus Large Business Interruption Loan Scheme.	A new Covid Corporate Financing Facility. Grants between £10,000 - £25,000 are available to eligible businesses.	No government measures have been enacted and so this will be at the discretion of the lender.	A deferral of VAT. A business rates holiday for certain sectors. Support to pay salaries of employees who are unable to work.
US	Loans and loan guarantees to businesses, States, and municipalities that do not exceed $500 billion in the aggregate, including $17 billion for businesses critical to maintaining national security, and an additional $367 billion to small businesses.	$280 billion to hospitals and local and state municipalities dealing with medical equipment shortages resulting from the COVID-19 crisis.	Loan and payroll tax deferrals depending on various factors. Most deferrals lasting between six months and one year; and some lasting until December 31, 2022.	Comprehensive stimulus package totaling $2 trillion in relief.

Country details

Austria

On 14^th March 2020, the Austrian government has announced that funds will be provided to support the economy. These funds were initially set at EUR 4 billion, but later increased to EUR 38 billion 26^th March 2020 so cover several mechanisms implemented to support companies and their employees. All measures are, theoretically, covered by these EUR 38 billion.

A first measure was instant support of EUR 1,000 for small and micro enterprises to cover the entrepreneur’s living expenses, which programme is already finished. In a second step, such enterprises may apply for payments of up to EUR 2,000 per month for a period of up to three months to keep the entrepreneurs operating small and micro enterprises from going bankrupt.

These funds are limited to companies with up to nine employees. Such direct payments from these funds may be applied for with the Austrian Chamber of Commerce, which was employed by the government to administer applications and disbursals.

In addition, a COVID-19 Relief Fund of EUR 15 billion was established by the government to support companies that are struggling with massive declines in sales and liquidity shortages due to the corona crisis. The aim of the fund is to reduce the economic damage and ensure the survival of companies

The first measure under this fund are guarantees for liquidity loans. The maximum term of such guarantees is 5 years and can be extended by up to 5 years. In order to apply for a guarantee, the following conditions must be met by the applying company:

the business activity must be carried out in Austria;
the liquidity requirement must be in Austria;
50 % reduction in bonuses paid to members of the Management Board;
no dividend payment may be made in the year in question.

These guarantees cover 90% of the loan amount with guarantees of 100% being provided for loans up to EUR 500,000. The maximum sum is the amount of turnover for 3 months or EUR 120 million. An increase is possible in justified exceptional cases. A loan interest rate of a maximum of 1% and guarantee fees are applied, which are determined by the EU and range between 0.25% and 2% depending on the size of the company and the duration of the guarantee.

Additionally, the government has dedicated a fund of EUR 9 billion to provide guarantees for existing loans. These guarantees are applied for in cooperation with the crediting bank.

The second instrument is the operating expenses subsidy for companies that suffer a drop in turnover of at least 40% for the whole year as a result of the COVID-19 crisis. This subsidy is the part of the guaranteed loan that no longer needs to be repaid. Depending on the extent to which the company is affected, fixed costs and spoiled goods up to of 25-75% will be reimbursed or are no longer repayable from the working capital loan taken out. The fixed costs include rent, electricity, gas, interest expenses and perishable and seasonal goods that have lost at least 50% in value due to the Corona crisis. The basis for assessment is the company's fixed costs and loss of revenue between 15^th March 2020 and the end of the COVID-19 measures.

The applications must include a presentation of the fixed costs actually incurred and the actual loss of sales. The information must be checked and confirmed by a tax advisor / auditor before submission. Additionally, the recipient of such subsidies is obliged to reduce their fixed costs as much as possible and make an effort to retain their employees.

The fixed cost subsidy can be applied for from 1^st May 2020 until 31^st December 2020. Payment will be made after the revenue loss has been determined, i.e. after the end of the business year and after submission of the tax advisor's or auditor's confirmation of the decline in turnover and the reimbursable fixed costs. The fixed cost subsidy is limited to a maximum of EUR 90 million per company and is tax-free, but reduces the deductible expenses by the corresponding amount.

Guarantee pledges for liquidity loans extended to export-oriented companies are also provided by OeKB for an amount of up to EUR 2 billion. SME may apply for a pledge of up to 15% of their previous business year’s export turnover, larger companies are limited to a figure of 10% with EUR 60 million as absolute limit for individual loan. The limits and the classification of SMEs apply to groups of companies, not just the individual entity. These pledges are applied for in cooperation with the crediting bank.

Micro enterprises and consumers are also benefitting from loan repayments being deferred by law. This applies to loan repayments due between 1^st April und 30^th June 2020, if the loans were already obtained by 15^th March 2020.

Furthermore, the government has reactivated and updated an existing program of working time reduction, where companies reduce employee working time with the government’s employment agency reimbursing a large part of the employees’ otherwise lost payment.

The application for working time reduction can be made retroactively starting from 1st April 2020. The deadline for applications for periods starting 1^st March 2020 has already lapsed. It may be applied for a period of up to 3 months, with an extension for another 3 months being possible, if necessary. A change of working time reduction or curtailment of the period it applies is also permissible.

The reduced working time has to amount to at least 10% of the previous working time on average over the entire period (e.g. 3 months), but in individual weeks the working time can be reduced to zero.

Working time reduction can be agreed for a specific company/ a company department, provided that it is organisationally independent. This only applies, if the departments are separated by different collective bargaining agreements or operating sites. However, individual employee groups may be excluded from this measure (e.g. part-time work for older employees, part-time work under 40%). Working time reduction is not applicable to marginally employed persons.

Employees’ vacation and time credits are to be consumed "as far as possible" before working time reduction is applied. Please note that vacation cannot be ordered unilaterally by the employer. The employer is – according to the now issued directive on working time reduction – obligated to make a serious effort to use up time credits and vacation. Proving success with such efforts, however, may not be possible. Overtime is possible during working time reduction but reduces the share of wages reimbursed by the state.

Termination of employment is not permitted during working time reduction. After the end of the working time reduction period, the employer is obligated to retain their employees for at least one month. Notice of termination may, therefore, only be given after this retention period has expired.

For working hours that are subject to reduction, the employee is entitled to working time reduction support, which is provided to the employer by the working time reduction support subsidised by the Austrian employment agency AMS (capped with the maximum social insurance contribution basis of EUR 5,370), amounting to 80%, 85% or 90%, depending on the standard salary. With the working time reduction reimbursement, the AMS also pays all ancillary wage costs from the first day. Employers must therefore "only" pay out the hours actually worked.

Social insurance contributions that are usually based on the salary, are to be paid on the basis of the previous contribution basis of the last 4 weeks – before the Corona working time reduction.

Overtime, overtime lump sums and a work obligation of more than 40 hours/week (possible in some employment contracts) are not to be taken into account in the calculation of the net reimbursement rate, i.e. the employee's net working time reimbursement pay of 80%, 85% or 90%. All-in contracts are treated differently, as any overtime compensated by the all-in salary is not denoted separately and, thus, cannot be separated from the payment for standard working hours of 40 hours/week.

Tax and social insurance contribution payments due in monthly or quarterly interim instalments are generally based on the previous year’s figures with the possibility to apply for a reduction, if profits are negatively influenced. The tax authorities have clarified that the COVID-19 crisis qualifies to apply for a reduction or the entire omission of the interim instalments.

The necessary turnover and profit figures, however, still have to be notified to the tax authorities within the usual monthly and quarterly deadlines. The tax authorities will not apply interest to 2020 annual tax arrears that may result from a reduced or omitted interim instalment.

Additionally, the deferral of payments already due may also be applied for with a maximum extension until September 2020. Alternatively, payment in instalments may be applied for. In these cases, an application to waive the otherwise usual additional fee for delay of payment is possible as well as for a waiver to additional fees that have already been set.

Deferral of social security contributions and reductions/waivers of interest and additional fees for arrears in payment may also be applied for with the social insurance institutions.

Contact us

Manuel Boka, Partner

Belgium

On 22 March 2020, Febelfin (the Belgian federation of the financial sector) and the National Bank of Belgium announced a series of measures to support lending to Belgian companies and individuals, supported by the Belgian federal government (Minister of Finance) and the Belgian financial sector. These measures focus on two aspects:

1) The financial sector is committed to providing viable non-financial companies, self-employed professionals as well as individuals (mortgage borrowers) facing payment problems due to the corona crisis support by deferring payment obligations (principal and interest) of their loans - free of charge - until 30 September 2020. In addition, the financial sector has agreed not to convert any more mortgage mandates into mortgage registrations. In the same context, the sector organisation for insurance companies Assuralia reached an agreement , with the help of the National Bank, the FSMA and the federal government on the suspension for payment for individuals of the debt balance insurance (‘schuldsaldoverzekering’) premiums, and on the fire insurance premium for those wo have become unemployed.

Presumably, “viable” companies will be those companies which did not have any payment delays on 1 February 2020; or which had less than 30 days’ payment delays on 29 February 2020; and which do not fall within the active credit restructuring.

2) The federal government will activate a guarantee scheme for all new loans and credit lines with a maximum term of 12 months granted by banks to viable non-financial businesses and self-employed professionals.

The guarantee scheme will have the following characteristics:

It will involve a total guarantee amount of EUR 50 billion.
All new additional credits and credit lines with a maximum maturity of 12 months (explicitly excluding refinancing credits) granted until 30 September 2020 will be covered by the guarantee scheme.
After the end of the guarantee scheme, the amount of losses incurred on the credits under the guarantee scheme will be assessed. The burden sharing between the financial sector and the federal government will be as follows:
- Borne entirely by the financial sector: the first 3% of losses on the total new loans;
- Borne 50/50 by the financial sector and by the federal government: losses between 3% and 5%.
- Borne 80% by the federal government and 20% by the financial sector: losses higher than 5%.

The National Bank of Belgium, together with Febelfin, will set up a monitoring system to monitor the guarantee scheme as well as the financial sector's commitments.

Link to announcement here (available in Dutch and French).

As for the different regions in Belgium, we refer to the following websites:

For the Region of Flanders: Under normal guarantee schemes, companies can have up to 75% of new financing agreements guaranteed by the Flemish government, in exchange for a one-off premium of 0.5% of the total amount. Due to the corona crisis, this premium is reduced to 0.25% of the total amount. In addition, companies can have a bridging loan guaranteed for existing debts for up to 12 months instead of 3 months. Please see the website of Flanders for further details and additional measures.

For the Walloon Region: In order to support companies which are in difficulty due to coronavirus, it was decided to set up an extraordinary fund of EUR 233 million to provide a single, lump-sum compensatory indemnity for SMEs and the self-employed professionals directly and indirectly affected by the decisions taken by the National Security Council. The application platform will be online on 27 March 2020 and actual payments are foreseen as from mid-April. Please see the website of the Walloon Region for further details and additional measures/

For the Region of Brussels Capital: Strong support for the cash flows of affected companies by granting (via the Brussels Guarantee Fund) public guarantees on bank loans, for a total amount of EUR 20 million. Please see the website of Flanders for further details and additional measures.

Contact us

Koen Devos, Partner
Caroline Schell, Associate

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China

Since the COVID-19 outbreak, the People’s Bank of China (the “PBOC”) and the China Banking and Insurance Regulatory Commission (the “CBIRC”) have been responding with a series of banking and finance measures to support businesses in the People’s Republic of China (the “PRC”) that have been affected by COVID-19.

Reduction in reserve requirement ratio

Most recently, in order to support economic growth and reduce financing costs, the PBOC has decided to reduce the reserve requirement ratio by 50 basis points (bps) for all banks in the PRC. An additional 100 bps cut would also be allowed for qualified city commercial banks. PBOC expects long term funds of RMB 550 billion would be released by this round of ratio reduction.

Bank to bank financing

In late January, the PBOC also launched a special purpose bank-to-bank financing programme to provide a total of RMB 300 billion low-cost special purpose loans to 9 national banks and a number of local banks in 10 provinces and municipalities, to support enterprises that are responsible for the supply of key materials and daily necessities for epidemic prevention and control. In February, the PBOC has agreed to issue another series of bank-to-bank loans, with a total amount of RMB 500 billion, to support the resumption of production and operation of businesses in the PRC. The funds would also be used by national and local financial institutions to, among other things, support the economic growth of less developed areas in the PRC, and provide liquidity to industries and sectors that are more seriously affected by the epidemic.

Deferral of Loan Repayments

The CBIRC and the PBOC have also jointly issued the Notice regarding the Implementation of Temporarily Deferral of Loan Repayments by Micro, Small and Medium-sized Enterprises (the “Notice”). The Notice encourages banks and financial institutions to provide a temporary extension to financially difficult micro, small and medium-sized enterprises for the repayment of principal which are due from 25 January 2020, and payment of interests which are due from 25 January to 30 June 2020. According to the Notice, due date for the payment of principal and interests can be extended to 30 June 2020, with no penalty interests chargeable. Further extension could be granted by local financial institutions for micro, small and medium-sized enterprises that have been severely affected by the epidemic yet have a positive growth prospects, on a case-by-case basis.

The banking authorities have also requested banks and other financial institutions to assist companies within certain sectors and industries, including health and medical care, manufacturing, transportation, and logistics, through a series of measures. The CBIRC has, for instance, asked banks to allow delays in repayment of loans owing by toll roads operators, which have been hit by the toll fee exemption policy implemented by the PRC government during the outbreak. The CBIRC has also instructed banks and credit providers in the rural areas to take an active role in satisfying the financial needs of producers and manufacturers of agricultural products.

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Michael Yau, Head of Banking & Finance Asia

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France

On 16 March, the President of the French Republic announced a number of measures to help French businesses facing the impact that COVID-19 and the accompanying social distancing measures is and will continue having on them. These measures are the following:

1) payment extensions of social and/or tax liabilities (social contributions, direct taxes);

2) in the most distressed situations, direct tax write-offs decided on a case-by-case basis;

3) moratorium on utilities and rental payments for the smallest distressed SMEs;

4) provision of grants of EUR 3,500 to 6,500 (EUR 1,500 by the State + EUR 2,000 to 5,000 by local authorities) for all small businesses, self-employed and micro-enterprises through the EUR 7 billion solidarity fund financed by the State and the local authorities (regions);

5) mobilization of the State to guarantee credit facilities needed due to the COVID-19 outbreak up to EUR 300 billion;

6) support from the State and the Banque de France (credit mediation) to negotiate with its bank a rescheduling of bank loans;

7) maintaining employment in businesses through a simplified and strengthened state cover for partial activity (chômage partiel);

8) support for the handling of a dispute with customers or suppliers by the Business Ombudsman; and

9) the recognition by the State and local authorities of Coronavirus as a case of force majeure for their public procurement. As a result, for all State and local government procurements, delay penalties will not apply.

10) Support plan for French export companies

The State guarantee relating to banking credit facilities, the measures put in place by the public investment bank, Bpifrance Financement SA (Bpifrance), the special measures for French export companies and the support measures announced by banks are detailed below.

State aid – General

A EUR 7 billion solidarity fund for small businesses financed by the State and the local authorities (regions) is avaiable for three months, renewable for three months. Businesses with less than 10 employees and self employed professionals, with a turnover of less than EUR 1 million whose taxable profit for the last financial year is less than EUR 60,000, having suffered an administrative closure or lost 50% of their turnover in March and April 2020 as compared to March and April 2019 or as compared to the average monthly turnover for 2019, will benefit from a grant of EUR 1,500 (or the amount of their loss of revenues if lesser). Companies under insolvency proceedings (judicial liquidation) before 1^st March 2020 are not eligible for this State aid.

As from 15 April, the companies encountering the most important difficulties shall be eligible for an additional grant of EUR 2,000 to EUR 5,000 at the region level under the following conditions:

- they have received the first grant of EUR 1,500;

- they employ on 1^st March 2020 at least one employee on a permanent or fixed-term basis;

- they are unable to pay their debts and fixed charges due within 30 days, including commercial or professional rents, due for March and April 2020;

- have a cash loan refusal for a demand made since March 1, 2020, with a bank of which they were clients before that date, this demand need to be either refused or remained unanswered after a period of ten days.

For the most distressed companies, an additional support can be granted on a case-by-case basis to avoid insolvency. The file appraisal shall be done by the regions and the State at the local level (regions).

In order to obtain the State aid (EUR 1,500), eligible businesses must submit a declaration on the website impots.gouv.fr. They should visit the website of their region and follow the requested procedure to obtain the region aid (EUR 2,000 to 5,000).

This solidary fund was created by the Order no.2020-371 of 25 March 2020

Q&A about the solidarity fund are available on the Ministry of Economy and Finance website

State guarantee relating to banking credit facilities

The Government is implementing an exceptional guarantee fund of up to EUR 300 billion to support corporate treasury needs. It is available since 25 March 2020.

The guarantee supports treasury loans made by credit and financial institutions (or crowdlending platforms) from 16 March 2020 until 31 December 2020 to enterprises registered in France whatever their legal form (companies, associations, foundations, liberal professions, etc.) and size, except civil property companies, credit institutions and finance companies - payment institutions and fintech companies can benefit from State guaranteed loans.

The guarantee will only be available for loans that meet a set of conditions which are:

1) the provision of a deferred amortization of at least one (1) year and the possibility, left to the discretion of the sole borrower, to amortize the loan over an additional period of 1 to 5 years;

2) the loan may finance up to 25% of turnover excluding VAT in 2019 (i.e. one quarter of activity) and, for newly created (i.e. created from 1^st January 2019) or innovative companies, this ceiling is set at 2 years of payroll;

3) not taking any other security or guarantee (except when they are granted to companies in France employing more than 5,000 employees or generating sales of more than EUR 5 billion); and

4) not being accompanied by a reduction in the assistance provided by the lender to the concerned company as compared to their level on 16 March 2020 (possibility to refinance existing loans).

Furthermore, the characteristics of the guarantee will be as follows:

1) the guarantee is remunerated between 0.25% and 0.50% during the first year and between 0.50% and 2.00% during the amortization period;

2) it shall cover:

90% of the loan for companies with less than 5,000 employees and EUR 1.5 billion turnover;
80% of the loan for companies with more than 5,000 employees and less than EUR 5.0 billion turnover;
70% of the loan for companies with more than 5,000 employees and more than EUR 5.0 billion turnover;

3) the State guarantee won’t cover defaults occurring during the first two months; and

4) it cannot benefit companies subject to insolvency proceedings (safeguard, rehabilitation and liquidation proceedings) opened before 31^st December 2019 but companies in preventive proceedings (conciliation, mandate ad hoc) and in the process of implementing a safeguard or recovery plan are eligible.

For companies with less than 5000 employees and with annual turnover of less than EUR 1.5 billion: they should contact their bank which will examine the company’s application and give a pre-approval upon review that the requirements above are met. The company will then have to connect on https://www.attestation-pge.bpifrance.fr to obtain a unique identification number from Bpifrance which will have to be communicated to the bank.

For companies with more than 5000 employees or whose annual turnover exceeds EUR 1.5 billion: the guarantee will be granted on a case-by-case basis, by order of the Minister of the Economy which may derogate the provisions of the 23 march 2020 Ministerial order (e.g. guarantee amount, State remuneration). Furthermore, for these companies:

- the maximum amount of the loan could be calculated either on a consolidated basis or on a corporate basis (as the sum of the turnovers of the eligible entities of the group registered in France);

- they should undertake not to repurchase shares, not to distribute dividends in 2020 to French and foreign shareholders (except if required by law or if the decision was taken before 27 March 2020), and not to have fiscal headquarter or subsidiaries without economic substance in a non-cooperative countries and territories as defined in Article 238-0 A of the French General Tax Code (Coge Général des Impôts) as long as they benefit from a cash support measure.

More information about commitments for large companies can be found on the French government website (Press release of 5 May 2020 about commitment for large companies).

For all companies, banks have undertaken to swiftly review all the applications they will receive. Furthermore, the cost of the loan should be limited to each bank's own financing cost (interest rate), without margin, plus the cost of the State guarantee.

For start-ups

The French government has set up a special emergency plan of EUR 4 billion for start-ups (special funds for start-ups) including the following measures:

- State guarantee for treasury loans for an amount of up to twice the 2019 French payroll or, if higher, 25% of annual turnover. These loans are distributed by private banks and Bpifrance. They should represent a total amount of nearly EUR 2 billion;

- acceleration of the reimbursement of corporate tax credits that can be returned in 2020, including the research tax credit (CIR) for the year 2019 and VAT credits;

- acceleration of the reimbursement of innovation aid already granted but not paid in 2020 for an amount estimated to EUR 250 million;

- a EUR 80 million package called "French Tech Bridge", financed by the Programme d'Investissements d'Avenir (PIA) and managed by Bpifrance to finance bridges between two fund-raisings.

Bpifrance emergency plan

Since 2 March 2020, the French public investment bank, Bpifrance, has organised an emergency plan to support very small enterprises, SMEs and mid-cap companies affected by the COVID-19 outbreak. It includes the following measures:

1) two Bpifrance guarantee funds. Subject to a limit of EUR 5 million for SMEs and EUR 30 million for mid-cap companies (meaning with less than 5,000 employees or EUR 1.5 billion turnover), Bpifrance guarantees up to 90%:

for companies that are granted a 2 to 6-year treasury facility to consolidate short-term indebtedness in the medium term; and
for short term committed indebtedness, if their bank confirms the committed indebtedness over a period of 12 to 18 months,

2) extending the traditional guarantees of investment loans. No management fees will be claimed for companies impacted by COVID-19 in the event of refinancing by the banks;

3) the refinancing of medium and long-term credits for Bpifrance customers. No intervention is required from Bpifrance's corporate clients. Rescheduling of the payments due for 6 months from 24 March 2020 will be automatically completed;

4) for companies benefitting from Bpifrance factoring program, the financing of an additional 30% of the amount of the discounted invoices and the release of the security deposit;

5) the implementation of the "Key Loan" (“Prêt Atout”). This unsecured loan aims to strengthen the cash flow of seriously distressed companies due to the COVID-19 outbreak. This loan does not address structural cash flow problems. This assistance applies to very small enterprises, SMEs and mid-cap companies with at least 12 months of activity. For SMEs, this loan can be up to EUR 5 million and EUR 15 million for mid-cap companies. It is granted for a period of 3 to 5 years with 6 to 12 months of deferred amortization; and

6) the implementation of the "Bounce Loan" (“Prêt Rebond”). In collaboration with the local authorities (regions), this loan is granted to SMEs. The amount can range from EUR 10,000 to EUR 300,000. It is granted for a period of 7 years with 2 years of deferred amortization at a preferential rate.

Bpifrance has committed to respond within five (5) working days following the solicitation of the guarantee by the lending bank. As part of Bpifrance's emergency plan, a green number has been set up to facilitate dialogue with businesses: 0 969 370 240 and all information are also available on Bpifrance website. To benefit from Bpifrance's measures you must fill out the online form.

Special Measures for French export companies

The French Government is implementing an exceptional guarantee scheme to support French export companies. This guarantee scheme is implemented through Bpifrance Assurance Export. Guarantees and pre-financing of export projects will be strengthened in order to secure the cash flow of exporting companies.

It includes the following measures:

- 90% export credit insurance of BPI Assurance Export for all SMEs and mid-cap companies (against 80% until now);

- the companies benefitting from an export pre-financing guarantee will have 6 months (against 4 months now) to put in place their underlying pre-financing credit;

- current prospecting insurance (assurances-prospection) will be extended by one year;

- the short-term export credit insurance under the Cap Francexport public reinsurance scheme is dobled to achieve EUR 2 billions;

- the support and information by the operators of Team France Export (Bpifrance, Business France and the Chambers of Commerce and Industry) is reinforced.

As part of Bpifrance's emergency plan, a green number has been set up to facilitate dialogue with French export companies: 0 969 370 240. All information about measures for French export companies are available on the BPI website and on the Ministry of Finance and Economy website. Q&A about these measures are also available here.

French banks’ commitments

French banks have been prompted by the President and the French government to participate in the national and European effort to deal with the economic crisis caused by COVID-19. In concrete terms, several measures, articulated with the exceptional public support schemes for businesses, have been decided by banks and announced by the French banking federation – (“FBF”) (Fédération Bancaire Française) on 15 March 2020:

1) the introduction of expedited credit appraisal procedures for tense cash situations within 5 days and special attention to distressed companies;

2) deferring credit repayments for businesses for up to six months;

3) removing penalties and additional costs relating to the extension of corporate maturities and credits; and/or

4) relaying government measures: in the context of exchanges with clients, communication and explanation of the public support measures (deferral of social or fiscal deadlines, public guarantee mechanism such as Bpifrance...).

As regards the extension of the credit repayments for businesses for up to six months, the press release of FBF does not give details regarding the businesses benefiting from this measure but reminds that, in general, banks will look closely at the individual situations of their merchant, professional, small and medium-sized business customers, impacted in the sectors most directly exposed and will seek solutions that are best suited to short-term financing needs.

Accordingly, if no more consensus is found between the banks, there may be some discrepancies in the manner they will apply this commitment, taking however into account that the banks are under pressure to find agreements with their customers since the French government has communicated its support to the borrowers and invited them to contact the Banque de France (and more specifically the credit mediation) to negotiate a rescheduling of their bank loans if need be.

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Sophie Perus, Partner

Delphine Baudouin, of counsel

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Germany

Suspension of obligation to file for insolvency, director’s liabilities in Covid-19-cases and restrictions of future claw-back rights

Germany suspended the obligation to apply for insolvency for Corona-related cases and attached liability of company directors.

Pursuant to the "COVID-19 Insolvency Suspension Act – COVInsAG" ("COVInsAG") which entered into force with retroactive effect from 1 March 2020, the obligation to file for insolvency for companies affected by the corona epidemic is currently suspended until at least 30 September 2020 (subject to a longstop date of 31 March 2021) where the duty to file for insolvency under normal circumstances would have arisen on or after 1 March 2020 (the “Suspension Period”). This also has an effect on the director’s liabilities attached to this obligation. Furthermore, the Act also restricts potential claw-back rights of a future insolvency administrator.

Suspension of the obligation to file for insolvency

1) The suspension only applies if the debtor’s current insolvency is a consequence of the Corona pandemic and if there are prospects to overcome the illiquidity. If the debtor is currently illiquid but was not illiquid on 31 December 2019, the Act provides for a legal presumption that the debtor’s current insolvency situation is a consequence of the Corona pandemic and that there are prospects to overcome the debtor’s current illiquidity.

2) The aim of the COVInsAG is to give damaged companies and their representatives in the corporate bodies time to conduct the necessary financing and restructuring negotiations to avert insolvency in the current particularly tense situation.

3) Directors must be able to demonstrate that the company was not illiquid on 31 December 2019 (as the legal presumption only applies in this case), companies will need to set-up and demonstrate liquidity, showing that the insolvency situation did not occur before 31 December 2019. The majority of companies are likely to rely on an accountant and should in such case also instruct their accountant to document and plan a restructuring scenario to be able to demonstrate the prospects of the restructuring.

4) In line with the suspension of the obligation to file for insolvency, the Act also restricts the right of creditors to file for the opening of insolvency proceedings over the assets of a debtor. An application which is filed by a creditor between 28 March 2020 and 28 June 2020 will only be successful if the debtor was already insolvent on or before 1 March 2020.

Suspension of liability

1) The COVInsAG also suspends the liability of managing directors for any payments made after the occurrence of an insolvency event and is implemented consistently – in accordance with the regulations on the suspension of the obligation to file for insolvency.

2) At the same time, it is becoming apparent that payments made during the Suspension Period, which serve to maintain business operations will be regarded as compatible with the requirements of emergency management (Sections 64 sentence 2 GmbHG/ 92 para 2 sentence 2 AktG) which will widely prevent liability of the management when making ongoing payments for rents, leases, salaries and other required payments.

Restrictions of future claw-back rights

1) In line with the suspension of the obligation to file for insolvency, the Act also restricts claw-back rights of a future insolvency administrator in case of a future insolvency proceeding.

2) If new loans are provided to the debtor or if the creditor is granted new securities for his loan during the Suspension Period, repayments on these loans which occur until 30 September 2023 and the provision of these securities are not deemed to be to the disadvantage of the other creditors and will therefore not be subject to claw-back by a future insolvency administrator. This also applies to the repayment of shareholder loans but not to the provision of new securities for these loans.

3) Payments or the delivery of goods or services to a creditor during the Suspension Period, to which the creditor was entitled, shall not be subject to claw-back rights by a future insolvency administrator. This shall not apply if the creditor knew that the debtor’s restructuring and financing efforts were not suitable to overcome its current illiquidity. The burden of proof for the latter is therefore borne by the insolvency administrator.

Liquidity support

The protection shield

The German federal government has adopted a billion-euro protection shield for enterprises to avoid a liquidity shortage because of the COVID-19 pandemic. Enterprises shall be protected with new and unlimited liquidity measures.

1. Expansion of existing loan assistance schemes provided by the German development bank KfW

Existing liquidity support programmes will be expanded in order to facilitate access to attractive loans for investments and working capital.

a) Enterprises that have been on the market for more than five years: "KfW Unternehmerkredit"

(i) For large enterprises (more than 250 employees, more than €50 million turnover or more than €43 million balance sheet total): up to 80% risk assumption (Risikoübernahme) (programme no. 037)

(ii) For small and medium-sized enterprises (about 250 employees and up to €50 million turnover): up to 90% risk assumption (Risikoübernahme) (programme no. 047)

b) Enterprises that have been on the market for less than five years: "ERP-Gründerkredit - Universell"

(i) For large enterprises (more than 250 employees, more than €50 million turnover or more than €43 million balance sheet total) that have been on the market for more than three years: up to 80% risk assumption (Risikoübernahme) (programme no. 075)

(ii) For small and medium-sized enterprises (about 250 employees and up to €50 million turnover) that have been on the market for more than three years: up to 90% risk assumption (Risikoübernahme) (programme no. 076)

This shall now also be applicable for enterprises that are less than 3 years on the market (large enterprises programme no. 073 and small and medium-sized enterprises programme no. 074).

c) Applications can be made at the enterprises' relationship bank in an amount of up to €1 billion per group of companies.

(i) The maximum loan amount is limited to:

o 25% of the annual turnover in 2019, or

o twice the wage costs of 2019, or

o current financing needs for the next 18 months for small and medium-sized enterprises or 12 months for large enterprises, or

o 50% of the total debt of the enterprise for loans over €25 million.

(ii) Reduced interest rates from 1.00 to 2.12 % p.a.

(iii) Term up to five years including one repayment grace year.

2. Additional KfW special programmes

a) Syndicate financing in an amount of at least €25 million (programme no. 855):

(i) Participation in syndicated financings of investments and working capital (direct participation as syndicate partner or indirectly through risk sub-participations)

o medium-sized and large enterprises

o up to 80% risk assumption (Risikoübernahme) but not more than 50% of the risk of the total debt.

The KfW risk share amounts to at least €25 million and is limited to:

o 25% of the annual turnover in 2019, or

o twice the wage costs of 2019, or

o the current financing needs for the next 12 months.

(ii) Optionally, all banks participating in the syndicate can be refinanced by KfW.

b) KfW fast-track loan for enterprises with more than 10 employees for small and medium-sized enterprises: "KfW Schnellkredit 2020" (programme no. 078):

KfW has now introduced a fast-track loan for small and medium-sized enterprises for investments and working capital, which differs from the above-mentioned KfW loan assistance schemes because the state/KfW bears 100% of the loan default risk which therefore increases the chance of receiving a loan commitment. This is the Federal Government's response to criticism from the economy that the relationship banks are too cautious in granting loans because of the residual risk remaining with the relationship bank.

Applications can be made by enterprises with more than 10 to 249 employees that have been in the market at least since 1 January 2019:

o Maximum loan amount: up to 3 months' turnover in 2019

o enterprises with up to 50 employees receive a maximum of €500,000

o enterprises with more than 50 employees receive a maximum of €800,000

o interest rate of currently 3.00 % p.a.

o 10 years term including two repayment grace years

o 100% risk assumption by KfW

o no credit risk assessment, neither by the relationship bank nor by KfW

o The enterprise must have made a profit either in 2019 or on average over the last 3 years (2017 to 2019)

o Applicants only with seat in Germany

Please note that all applications for KfW loan assistance schemes need to be submitted via the enterprises' relationship bank which will then enter into a cooperation with KfW in this respect. Applications can be submitted, provided that the enterprise was not an “enterprise in difficulty” (as per EU definition) as at 31 December 2019.

KfW waives its own risk assessment for loan amounts of up to €3 million per enterprise, for loan amounts above €3 million up to and including €10 million per enterprise KfW conducts a simplified risk assessment. An exception is made for the KfW fast-track loan where no risk assessment is made, see above.

3. Guarantee schemes

a) Guarantees provided by the German guarantee banks (Bürgschaftsbanken)

The maximum guarantee amount will be doubled to €2.5 million. In order to accelerate the provision of liquidity, decisions on granting a guarantee up to an amount of €250,000 can be made by the guarantee banks independently and within 3 days.

b) Parallel federal-state guarantees provided by the large guarantee programme

This programme is a cooperation between the Federal Government, the State Development Banks (Landesförderbanken) and the guarantee banks and such measures are covered by the state aid regulations. Such programme has so far been limited to enterprises in economically underdeveloped regions and will now be available for enterprises outside these regions to cover working capital financings and investments with a guarantee requirement of minimum €50 million and with a guarantee cover of up to 80%.

4. Establishment of an economic stabilisation fund (WSF)

On 27 March 2020 the law on the establishment of an economic stabilisation fund (Wirtschaftsstabilisierungsfondsgesetz - "WStFG") was adopted, which is to provide concrete support instruments for enterprises with liquidity bottlenecks. The fund is authorised to:

a) grant guarantees in a total amount of up to €400 billion in order to eliminate liquidity bottlenecks and support refinancing on the capital market. The term of the guarantees and the liabilities to be covered may not exceed 60 months.

b) participate in the recapitalization of enterprises by acquiring subordinated debt instruments, hybrid bonds, profit participation rights, silent partnerships, hybrid bonds or shares in the company and by taking over other components of the equity capital of these enterprises. Accordingly, the Ministry of Finance is authorized to take out loans of up to €100 billion for the WSF to cover expenses and measures.

c) grant loans to KfW to refinance the above-mentioned special programmes. For this purpose the Ministry of Finance is authorised to take out loans of up to €100 billion. The detailed conditions of the refinancing are to be determined on a case-by-case basis.

The Ministry of Finance may make the granting of support measures subject to certain conditions. Details will be set out in a legislative decree.

Access to the instruments should be granted to enterprises that meet at least two of the following criteria:

o More than €43 million balance sheet total

o More than €50 million turnover

o More than 249 employees on a yearly average

Enterprises that do not meet the above-mentioned requirements but are active in sectors according to § 55 of the Foreign Trade and Payments Regulation (Außen-wirtschaftsordnung) or are of comparable importance for security can also apply for guar-antees. The WSF decides on these applications at its own discretion.

The enterprises must not have access to other financing options. The stabilisation measures must provide a clear, independent perspective for continued operations after the pandemic has been overcome. Enterprises applying for a measure of the WSF may not have met the EU definition of “enterprises in difficulty” as at 31 December 2019. Enterprises that make use of a guarantee or recapitalisation measure must guarantee a "sound and prudent" business policy, in particular by contributing to the stabilisation of production chains and securing jobs.

The law entered into force on 30 March 2020.

Change of law: Law for the Mitigation of the consequences of the COVID-19 – Consumer loans

On Friday 27 March 2020, the law to mitigate the consequences of the COVID 19 pandem-ic in civil, insolvency and criminal procedure law was adopted.

With regard to consumer loan agreements entered into before 15 March 2020, claims for repayment, amortisation and interest which are due between 1 April and 30 June 2020 shall be deferred by 3 months from their respective due date if the borrower suffers a decline of income due to the extraordinary circumstances caused by the COVID-19 pandemic, making payments un-bearable for the debtor, specifically in cases where the debtor’s means for living or the existence of business are endangered.

Further, creditors’ termination rights due to a payment default or a significant deteriora-tion of the financial circumstances of the consumer or the value of a security provided for the loan are suspended until the expiry of the deferral period.

If the creditor and consumer cannot agree on an arrangement for the time period after 30 June 2020, the term of the loan will be prolongated by 3 months.

The above shall not apply if the creditor can claim that a deferred payment or the sus-pension of the termination right are unbearable for the creditor, taking into account all circumstances of the individual case.

These amendments entered into force on 1 April 2020.

Please note that these provisions are, other than as set out in the first draft of the amendment, only applicable to consumer loan agreements. However, the Federal Gov-ernment may, in an accelerated procedure, extend the personal scope of the provision, in particular, to micro enterprises.

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Christian Hilpert, Partner

Stefan Schramm, Partner

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Ireland

Specific Initiatives

The Irish government has been working with banks and regulatory organisations to support individuals and businesses impacted by Covid-19. To date the following specific measures have been announced:

a €200m Strategic Banking Corporation of Ireland (SBCI) Working Capital scheme for eligible businesses impacted by COVID-19. Loan of up to €1.5m will be available at reduced rates, with up to the first €500,000 unsecured. The terms and conditions will be available on the SBCI website when published;
a €200m Package for Enterprise Supports including a Rescue and Restructuring Scheme available through Enterprise Ireland for vulnerable but viable firms that need to restructure or transform their business;
the maximum loan available from MicroFinance Ireland will be increased from €25,000 to €50,000 as an immediate measure to specifically deal with exceptional circumstances that micro-enterprises – (sole traders and firms with up to nine employees) - are facing. Applications can be made through the MFI website or through a local enterprise office; and
the Credit Guarantee Scheme will be available to eligible SME’s impacted by COVID 19. Loans of up to €1m will be available at terms of up to seven years.

General Principles

The Irish Government and the banking sector have confirmed that they will adopt a coordinated approach to borrowers whose income has been impacted by Covid-19. The range of supports proposed are customer focused and cater for the different impacts of Covid-19 on each individual customer and include:

extensive supports for small and medium enterprises. The banks are working to ensure a wide range of credit, cashflow and supply chain supports are offered to businesses who are trying to manage pressures arising from Covid-19;
the adoption by the banks of a customer focussed approach to all businesses with a wide variety of tailored support including extension to credit lines, risk guarantees and trade finance;
flexible arrangements including a payment break for mortgages and other loans. Customers affected by Covid-19 must contact their bank to discuss what flexibility is available;
support for the buy-to-let bank customers with tenants affected by Covid-19;
domestic retail banks to defer enforcement proceedings for three months;
limit on contactless card payments increased from €30 to €50; and
stamp duty charge on credit cards to be pushed out to July 2020.

Fiscal changes

The Irish Central Bank has reduced its capital buffer from 1% to 0% to free up capital that can be used to provide credit and restructure and extend the loans of bank customers, both individuals and small and medium enterprises. It is anticipated that this will free up in excess of €1 billion of bank capital and has the potential to support approximately €13 billion euro of restructured lending to bank customers who need assistance.

When this is combined with the relaxation of political guidance and the capital conservation buffer by the European Central Bank, this will ensure that banks have significant resources at their disposal to support borrowers.

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Piaras Power, Head of Banking & Financial Services Ireland

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Italy

Italy was the first European Country to face the COVID-19 emergency. Therefore, the Italian Authorities have unanimously cooperated in order to take all the necessary measures and steps to mitigate the spread of the mentioned virus. The legal and private acts mentioned below are only a brief summary of the most important interventions in relation to the economic and financial implications of this global emergency.

The first Presidential Decree with economic measures for the “red zone”

Among the first legal initiatives, the Presidential Decree approved by the Italian Government on 28 February 2020 (which came into force on 2 March 2020), provided emergency measures to contain the transmission of the virus and its consequences on the national economy.

With reference to the economic measures, the following have been the most relevant for the small-medium enterprises[1] headquartered in the so called “red zone”[2]:

suspension until 30 April 2020 of the payments due to certain authorities, such as tax demands issued by the tax authorities and the amounts due to local authorities in relation to property taxes; and
suspension for 12 months (starting from 2 March 2020) of payments due to Invitalia for financings granted to eligible enterprises[3].

The Civil Protection Order: a moratorium to real estate and commercial loans

Following the aforementioned Presidential Decree, the President of Civil Protection provided for additional measures and, more specifically, for a debt moratorium. According to Order no. 642 of 29 February 2020, the borrowers are entitled to defer (until the end of the state of emergency) the payment of instalments of loans granted by banks and/or credit institutions for the purposes of (i) the purchase of real estate properties or (ii) the financing of commercial and business (including agricultural) activities.

The role of the private players: the addendum of the Italian Banking Association

It must be said, that not only are the public authorities playing a role in facing the COVID-19 emergency but private operators and associations have also intervened. On 7 March 2020, the Italian Banking Association drafted an addendum deemed to entitle small-medium enterprises to request either (i) a moratorium to instalment payments (up to one year) or (ii) an extension of the loan (no longer than the period between the request date and the repayment date and, for short term loans, no longer than 270 days).

The so called “Cura Italia” Decree

The most recent and important legal act is Presidential Decree no. 18 of 17 March 2020, i.e the “Cura Italia” Decree, which provided targeted measures for small-medium enterprises owing debt to banks and/or financial intermediaries. Those small-medium sized enterprises that suffered a temporary shortage of liquidity as a direct consequence of the COVID-19, upon self-certification, may apply for the following relief (provided):

outstanding lines of credit (either used or unused) shall become irrevocable until 20 September 2020;
bullet loan and leasing payments to be reimbursed before 30 September 2020 shall be automatically extended until 30 September 2020 under the same terms (this also applies to any security or guarantee assisting the loan); and
with respect to mortgages and other loans repayable in instalments, the payment of instalments falling due before 30 September 2020 shall be deferred until that date, and the repayment date shall be extended without additional costs for either party. Small-medium enterprises may only request the suspension of principal payments.

In addition to the above, pursuant to the Cura Italia Decree, the role of the Central guarantee fund[4] for the small-medium enterprises (Fondo centrale di garanzia per le PMI) has also been strengthened. The Central guarantee fund will, inter alia, grant a direct guarantee covering up to the 80% of the loan (for a total amount not exceeding EUR 1,5 million for each enterprise) to the lenders, for no charge. Moreover, those enterprises which requested the extension of the loan will benefit from the same extension for the guarantees granted by the Central guarantee fund.

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Marco Franzini, Partner

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Netherlands

The Dutch government announced a series of financial measures to help Dutch midsized and large companies to continue their businesses while facing uncertainties and financial distress as a result of COVID-19. The key financial measures described below are in addition to certain other emergency measures which have been implemented in the Netherlands, including job retention measures and tax breaks. This overview has been updated from time to time.

Dutch corporate guarantee scheme

The Dutch corporate guarantee scheme (GO scheme) was originally implemented during the credit crisis in 2009. Under the GO scheme, Dutch companies were able to obtain more favourable financing conditions from banks. In light of COVID-19, the government has increased the GO-budget from EUR 400 million to EUR 10 billion. The maximum eligible loan was increased to EUR 150 million. Among other conditions, borrowers must have substantial business activities in the Netherlands and banks must on-pay to the government part of the interest margin charged to the borrower. A number of industries are excluded from the GO scheme (e.g. agriculture, fisheries and aquaculture (with the exception of supplies and services), real estate for speculative purposes, banking, insurance or investment or private equity and health care (with certain exceptions)). In addition, the government has implemented a Corona-module under the GO scheme (GO-C scheme), whereby the 50% government guarantee was increased to 80% for large companies and 90% for midsized companies, provided that these companies are affected by COVID-19. The GO-C scheme is available from 29 April 2020.

Guarantee scheme for midsized companies

A temporary facility has been implemented under the existing government guarantee scheme for midsized companies facing financial distress because of COVID-19. Midsized companies are those that have less than 250 employees and a maximum turnover of EUR 50 million per year, or a maximum balance sheet total of EUR 43 million. Under this guarantee scheme, companies are able to obtain up to 75% (previously 50%) of their required financing, whereby the government guarantees 90% of the loan (with a maximum guaranteed amount of EUR 1.5 million). The scheme can be used for the purpose of bridge financing or to increase working capital facilities with a maximum tenor of 4 years. Interest amounts to 2% and a revenue test applies. Accreditation is available to financiers other than banks. The current budget amounts to EUR 1.5 billion.

Bridge financing for start-ups, scale-ups and innovative midsized companies

EUR 100 million is available for bridge financing to start-ups, scale-ups and other innovative midsized companies who are now being affected by COVID-19. Bridge loans vary between EUR 50K and EUR 2 million with an interest rate of 3% and a tenor of 3 years. If loans exceed EUR 250K, 25% co-financing is expected from shareholders or other investors. Early repayment of the loan is possible without penalty. Different conditions apply to loans above EUR 500K.

For innovative start-ups and scale-ups with larger financial needs, the temporary bridging credit program for innovative start-ups and scale-ups was set up. Invest-NL has made EUR 100 million available.

Seed capital

The seed capital scheme is open since 1 January 2020 to support innovative companies in the technical and creative field to obtain venture capital. Private lenders and the government established a fund which will invest in promising techno starters and creative starters. Due to COVID-19, the subsidy limit has been increased to EUR 32 million.

Growth facility scheme

The growth facility scheme is available for companies who require risk capital, for example to finance growth, a takeover or expansion abroad. This scheme would have been phased out but this has been delayed for one year, until 1 July 2021. The growth facility provides lenders with a 50% government guarantee on subordinated loans.

Small credit corona guarantee scheme

The government has reserved EUR 750 million for bridge loans for companies with relatively small financing needs amounting from EUR 10K up to EUR 50K, with a 95% guarantee from the government. The loans are to be provided by the banks with an interest of up to 4% and a five years maturity. In addition, companies are expected to pay a one-off premium of 2% of the guaranteed amount to the government as compensation. It is also possible for non-bank accredited financiers to provide loans. The small credit corona guarantee scheme will enter into force once approval of the European Commission has been obtained.

Suretyship scheme for midsized agricultural companies

The suretyship scheme enables midsized agricultural companies to attract financing that would otherwise not be possible. Under the scheme, bridge financing will be available which will be subject to 70% government cover with certain conditions such as size (up to EUR 2.8 million), tenor (up to 2 years) and upfront fees (3%, or 1% for start-ups).

Re-insurance of short term credit insurances by the government

The government announced to reinsure credit insurers that provide short-term credit to stores and the hospitality trade to enable longer payment terms in 2020. The intention is that credit insurers will be less inclined to decrease their insurance limits in the short term. This measure is still subject to approval of the European Commission.

Financial support for Qredits

Qredits is a foundation which provides micro financing to starters and micro companies. To mitigate any COVID-19 risks for Qredits, starters and micro companies, the government announced support for Qredits of up to EUR 6 million. The support means that borrowers who have a loan from Qredits do not have to repay their loan for a period of 6 months and interest rates will be reduced to 2%.

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Pim van Leersum, Partner

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Norway

On 13 March 2020 the Norwegian government proposed several mitigating measures against the negative effects of the measures taken against the spread of the Covid-19 virus in Norway. The number of proposed measures have increased over the last two weeks.

The main measures are:

1) the introduction of a NOK 50 billion SME liquidity credit facility to be guaranteed 90% by the State and to be administered by the banks;

2) the re-establishment of the Norwegian State Bond Fund (Nw: Statens Obligasjonsfond), with a NOK 50 billion mandate to invest in the Norwegian bond market;

3) reduction in the countercyclical capital buffer for financial institutions from 2.5% to 1%;

4) reduction in the period which the employer has to pay salaries following temporary lay-offs from 15 days to 2 days;

5) deferred payment of national wealth tax for businesses with deficits;

6) deferred deadline for the advance payment of tax for Q1 2020;

7) reduction in VAT rates for service and travel and deferred payment deadlines for VAT and employers' national insurance contributions; and

8) option to apply up to NOK 30 million of deficit for 2020 against any taxable surplus in 2019, i.e. that paid-in taxes for 2019 will be reimbursed for 2020.

State guarantee relating to banking credit facilities

On 15 March 2020, the Norwegian government launched its crisis mitigation package directed towards Norwegian businesses. One of the measures was a NOK 50 billion state guarantee credit facility aimed towards SMEs. The proposal was adopted by the Norwegian parliament on 21 and 24 March 2020, and is currently awaiting approval by the ESA due to state aid constraints.

Main terms:

a) to be administered solely by banks with license to operate in Norway and with automatic issue (reporting duty only) of state guarantees covering 90% of any loss;

b) only applies to SMEs (less than 250 employees, turnover of no more than EUR 50 million or balance sheet of no more than EUR 43 million), however excluding real estate owning companies;

c) applicants must have business operations in Norway (i.e. registered with the Norwegian Register of Business Enterprises);

d) the business must have a severe lack of liquidity due to Covid-19, and (in the banks' opinion) viable post-Covid-19, i.e. that the business would be profitable under normal market conditions;

e) maximum amount of NOK 50 million per business, calculated on the basis of 2 times the wage cost in 2019 or 25% of the turnover in 2019;

f) term of less than 3 years, preferably shorter with extension options;

g) same commercial terms as under normal circumstances with respect to margin, security, guarantees etc.;

h) not to be used to prepay existing debt or payment of instalments or interest under existing facilities;

i) restriction on dividends as long as the loan is outstanding; and

j) 50 bps guarantee premium to the State.

Re-establishment of the Norwegian State Bond Fund (Nw: Statens Obligasjonsfond)

The Norwegian State Bond Fund (Nw: Statens Obligasjonsfond) was originally established in 2009 to mitigate the effects of the credit crunch, and was wound up in 2014 when its investments had been repaid. On 15 March 2020, the government proposed to re-establish the fund with an investment mandate of up to NOK 50 billion targeting mid-size and larger businesses.

Main terms:

a) details of the specific mandate is yet to be determined;

b) the fund will be administered by the National Insurance Scheme Fund (Nw: Folketrygdfondet);

c) only bonds issued by Norwegian issuers;

d) a substantial part of its investments will be in bonds issued by non-financial businesses, primarily investment grade, but also high yield;

e) investments can be made towards the issue of new bonds or by purchase of existing bonds; and

f) requirements as to the credit rating of the issuer.

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Hans-Christian Donjem, Partner, MNA
hc.donjem@haavind.no
+47 95 05 48 68
Advokatfirmaet Haavind AS
haavind.no

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Poland

On 31 March 2020 the Polish Parliament enacted a package of special acts constituting the so called “Anti-Crisis Shield” in order to counteract the adverse economic consequences of the coronavirus pandemic on companies and employees. The financial measures described below are in addition to other special measures like new rules regarding holding management board and shareholders meetings, subsidies during standstills or expiry of mutual obligations of the parties of lease agreements regarding lease, tenancy or other similar contractual obligations in shopping centers having a sales space exceeding 2,000 sq. m. which have been introduced in Poland in the last weeks.

Polish Guarantee Scheme established by Polish National Development Bank (Bank Gospodarstwa Krajowego - BGK)

The scheme will enable the provision of public guarantees amounting to up to PLN 100 billion. The support consists in the provision by the Polish National Development Bank (Bank Gospodarstwa Krajowego, “BGK”), of public guarantees on investment loans and working capital loans.

It will be accessible by medium and large Polish companies active in all sectors, aims at limiting the risk associated with issuing loans to those companies that are most severely affected by the economic impact of the current crisis. It will help businesses to cover their immediate working capital or investment needs and ensure that they have sufficient liquidity to continue their activities.

The surety or guarantee will cover not more than 80% of the outstanding amount of the facility for which the surety or guarantee is granted. The commission on these guarantees was lowered to 0%.

Support by the Polish Development Fund (Polski Fundusz Rozwoju - PFR)

According to the new legislation, the Polish Development Fund (“PFR”) has been designated to prevent or mitigate the effects of crisis situation, including those caused by the spread of the coronavirus.

The PFR will be entitled, inter alia, to provide financial nonrefundable support or support in the form of guarantees and sureties, repair or cover damages or losses caused by the epidemic. The regulations allow the PFR to entrust the performance of certain tasks to other entities, not only within the PFR group, but also to other entities like investment funds and banks.

The PFR prepared the following measures:

1) Funding for microenterprises in the form of a financial subsidy

It is aimed at enterprises with between 1 and 9 employees (not self-employed) whose annual turnover or balance sheet total does not exceed EUR 2 million. It will be available to businesses that have suffered a fall in revenue of at least 25% in any month after February 1st this year in comparison with the previous month or the same month last year in connection with COVID-19. The funding will also be available to companies that are banned from operating due to sanitary restrictions. The maximum value of the scheme for micro-businesses is PLN 25 billion, of which the assumed amount of non-returnable funds will be about PLN 16 billion.

The maximum amount of the subsidy depends on the scale of the decrease in revenue and the number of employees and may amount up to PLN 324 thousand and 75% of its value may be non-refundable. 25% of its value is non-refundable on the condition that it continues to operate within 12 months of its granting. An additional 50% of the subsidy is non-refundable depending on the level of maintenance of average employment within 12 months. In the case of employment reduction, the percentage of subsidy return by the entrepreneur is correspondingly higher, which constitutes a strong incentive for the beneficiaries to maintain their jobs. After 12 months, the rest of the subsidy is repaid in instalments spread over 24 months.

2) Funding for SMEs

Funding for SMEs is targeted at companies with 10 to 249 employees and an annual turnover not exceeding €50 million or a balance sheet total not exceeding €43 million. Its basic principles are similar to those of micro-businesses (at least 25% decrease in revenue, return after 12 months for 24 months). The main differences are the maximum amount of the subsidy, which constitutes 4%, 6% or 8% of annual sales, depending on the scale of the drop in sales to a maximum of PLN 3,5 million.

The maximum value of the programme for SMEs is PLN 50 billion, of which the assumed amount of non-returnable funds may amount to PLN 32 billion.

3) Funding for large companies

For companies with 250 or more employees, the PFR proposes following forms of financing:

• Liquidity financing in the form of loans or bonds for a period of 2 years with a value up to PLN 1 billion.

• Preferential financing in the form of preferential loans for a period of 3 years partly non-refundable and dependent on financial loss and maintaining employment of up to PLN 750 million per entity.

Amendments also expand the catalogue of forms of granting financing to enterprises in other forms than the subscription of stocks of shares or shares (which are newly issued shares) such as the purchase of shares (out of the existing share capital) and the subscription and purchase of bonds and other securities.

Grants for self-employed and loans for micro-enterprises

The head of the district (starosta) will be entitled to grant to a self-employed professionals additional financing in the event of a drop in the entrepreneur’s income as a result of coronavirus pandemic by 30% or more in the period of any two consecutive months after 1 January 2020 (when compared to the same period in 2019).

Depending on the extent of the drop in income, the subsidy may be granted as an amount that does not exceed 50% to 90% of the remuneration of individuals to whom the application relates, but no more than, respectively, 50% to 90% of the amount of the minimum statutory remuneration in relation to each individual.

Micro-enterprises are eligible to apply for loans up to PLN 5,000. An entity may be relieved from debt repayment if the statutory criteria have been met (one of them is maintaining the headcount of employees). To benefit from the remission of the loan, the micro-enterprise will have to operate for a period of 3 months from the date the loan was granted.

Aid measures taken by Polish Bank Association in connection with the coronavirus disease (COVID-19) pandemic

Banks agreed to the postponement (suspension) of repayment of principal and interest installments or capital installments for a period of up to 3 months and automatic extension by the same period of the final loan repayment period provided extension of the period of validity of loan collateral. The facilitations are to relate to housing loans, consumer loans for individual clients, loans to entrepreneurs and will include on quick consideration of the applications of those clients who justify the need to postpone (suspend) their loan due to their financial situation caused by the COVID-19.

In the same context, banks agreed to deferment of repayment of lease instalments and payments under factoring agreements.

On 31 March 2020 The Polish Financial Supervision Authority (KNF) published its position on extension or increase of financing by banks in the case of temporary loss of liquidity and indicated a preferential treatment of loans covered by BGK guarantees for corporate clients not covered by the scope of special measures established in anti-crisis shield.

Planned amendments to the Bankruptcy Law

Pursuant to the Polish bankruptcy law, a debtor must be insolvent to be declared bankrupt. The law defines insolvency as a condition in which the debtor is no longer capable of meeting his financial obligations (this is the so-called liquidity criterion) or the amount of liabilities will exceed the value of assets and such status continues for not less than 24 months (balance sheet bankruptcy).

Polish bankruptcy law currently in force obliges the debtor to file a petition for bankruptcy within 30 days of the day on which the grounds for declaring bankruptcy arose.

According to announcements made by the Polish government, the deadline to file for bankruptcy for a debtor that has become insolvent due to a state of emergency or an epidemic is to be extended to three months from the date on which the epidemic state is officially declared over.

Other key measures include

• New limit on non-interest costs of consumer credit:

- in the case of consumer loans with a repayment period of less than 30 days, it is 5% of the total amount of the loan,

- in the case of loans with at least a 30-day repayment period, it is 15% of the total amount of the loan + 6% for each year, but not more than 45% of the total amount of the loan.

• New rules for calculating the repayable financing period and the loan period (within the meaning of Act of 26 October 1995 on certain forms of support for the housing sector), where this period does not include the grace period for repayment of the capital when the grace period was granted at the request of the borrower in connection with an epidemic or emergency situation.

• During the period of the prohibition to conduct business activities in a shopping centers with a sales area exceeding 2,000 sq. m., the mutual obligations of the parties under a lease, tenancy or other similar agreement, expire which might affect investment transactions.

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Michal Markowski, Partner Head of Banking and Finance Poland

Spain

With the aim of facing and reducing the economic and social consequences arising from the COVID-19 virus, the Spanish Government issued the Royal Decree-Law 8/2020, of 17 March 2020, on extraordinary urgent measures to face the economic and social impact of the health crisis (the “Royal Decree-Law”). Whilst the Royal Decree-Law has a direct impact on many sectors, this note focuses on those relating to the financial sector.

It should be noted that many of the measures are still very generic (for example, with regard to the criteria applicable to financial transactions which will be guaranteed by the State) and that some are not particularly clear.

It will accordingly be important to see how the Royal Decree-Law is developed by the Government and the various ministries concerned. We will report subsequently at the relevant time on such developments and how the provisions are implemented.

Financing measures to ensure corporate liquidity and avoid insolvency

With regard to financial transactions, the government has approved a series of measures to provide guarantees for existing financing arrangements and to provide new financing through the Instituto de Crédito Oficial (the “Official Credit Institute” or “ICO”), including additional insurance coverage for exports.

In particular, the Ministry of Economic Affairs and Digital Transformation will provide guarantees of up to EUR 100 billion for financing granted by financial institutions to companies and the self-employed to meet their liquidity needs. The details as to how this will be implemented will be established by agreement of the Council of Ministers.

As regards new financing, the Spanish Government is extending the ICO's net debt limit for the granting of new ICO financing lines through the intermediation of financial institutions in the short, medium and long term for larger companies, the details of which are to be approved by the ICO.

On an extraordinary basis and until 18 September 2020, the Spanish Government, through CESCE, S.M.E., the Spanish export credit agency, will provide additional guarantee lines totalling EUR 2,000 million for the new financing of working capital required by unlisted export companies that are internationalised or in the process of internationalisation. However, this will only apply to those companies whose financing needs have not arisen from situations prior to the current crisis, nor from bankruptcy or pre-bankruptcy situations or from incidents of non-payment to public sector companies or debts to the Spanish Government recorded before 31 December 2019.

Furthermore, the Royal Decree-Law clarifies that deeds to formalise contractual amendments to loans and mortgage loans which arise as a result of the above measures will be exempt from stamp duty (AJD).

With regard to mortgage loans, the Royal Decree-Law provides for a moratorium on mortgage payments which will apply to particularly vulnerable mortgagors who see their income reduced. Such measures include a prohibition on lenders seeking early repayment of the loan and on taking enforcement procedures against qualifying mortgagors for the duration of the moratorium.

Finally, the Royal Decree-Lay modifies the Fund for Technical Provisions associated with the Red Cervera I+D+I (i.e. Investment plus Development plus Innovation) to allow the financing of business research and development projects of SMEs (i.e. Small and Medium Sized Businesses) and mid-cap companies by means of financial support which will be provided through loans managed by the Centre for the Development of Industrial Technology (Centro para el Desarrollo Tecnológico Industrial (CDTI)).

Foreign direct investments in Spain

The Royal Decree-Law provides for certain restrictions relating to foreign direct investments (these being understood to be investments emanating from entities/persons in countries that do not form part of the EU or the European Free Trade Association) through which (i) a holding of more than 10% of the capital is reached in the Spanish target company or (ii) a position is obtained in the Spanish company's management or governing body. The restrictions imply that any such transactions will require prior administrative authorization from the Spanish Government failing which the transaction will be deemed invalid and be classed as a serious infringement for sanctioning purposes.

Those transactions which are subject to the restrictions are the following: certain sectors of investment such as those relating to critical infrastructure, technology, dual-use items, suppliers of critical products (utilities (in particular energy) and food), sectors with access to sensitive information, in particular personal data, and/or media. It should be noted that the reference to sectors where there is access to sensitive information and in particular personal data is potentially very wide and some further clarification regarding what this is intended to capture would be desirable.

The restrictions also apply to certain investors where the investor is controlled by the government of another country, the investor has made investments in sectors or activities affecting security, public order and/or public health in another member state, or an administrative or judicial proceeding has been initiated against the investor in another state.

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Juan E. Díaz, Managing Partner

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Sweden

To mitigate the effects of the COVID-19 outbreak and to reduce the spread of the virus, several economic measures have been taken by the Swedish Government, targeted at both small and medium sized businesses and larger companies. Some of the measures presented in response to the COVID-19 virus are outlined below.

Credit guarantees to airlines as a result of the COVID-19 virus

The spread of the COVID-19 virus has resulted in a dramatic fall in the demand for air travel. Airlines are in an emergency economic situation and have difficulties securing loans. As a response, the Government shall, during 2020, have the right to issue credit guarantees of up to SEK 5 billion for loans to airlines that on 1 January this year had a Swedish permit to operate commercial aviation and who have their main operations or headquarters in Sweden. SEK 1.5 billion of the total amount is intended for Scandinavian Airlines (SAS). The state will guarantee the loans extended by commercial banks to eligible airlines. The credit guarantees must be registered and approved by the European Commission (Sw. Europeiska kommissionen) before they can be issued. This bill was passed in the parliament (Riksdag) on 19 March 2020.

Increased loan facilities and credit guarantees for Swedish businesses

During the past few weeks, the following measures have been presented in order to help Swedish businesses, small- and medium sized businesses in particular, to access finance:

The state-owned venture capital company Almi Företagspartner AB (“Almi”) will receive a capital contribution of SEK 3 billion to increase its lending to small and medium sized businesses throughout the country. This reinforcement of the funding of Almi will increase its preparedness to meet the needs of businesses whose activities have been adversely affected by the COVID-19 virus outbreak. This was decided by the Government and did not require approval from the Riksdag.
The Swedish Export Credit Corporation’s (Sw. Svensk Exportkredit) credit framework will be increased from SEK 125 billion to SEK 200 billion and can be used to provide both state-supported and commercial credit to Swedish export companies. These measures, along with the cancelled dividend payouts proposed by the Swedish Export Credit Corporation on 19 March 2020, give the Swedish Export Credit Corporation enhanced opportunities to meet the export industry’s increased demand for credit. This was decided by the Government and did not require approval from the Riksdag.
The Swedish Export Credit Agency (Sw. Exportkreditnämnden) promotes Swedish exports and the competitiveness of Swedish industry by providing guarantees that facilitate the financing of purchases of Swedish goods and services. Increased credit guarantees totalling SEK 500 billion and lower risk for banks will provide new and improved credit opportunities for companies. A new guarantee for faster and more secure payment to Swedish export companies will also be introduced. This will apply to small- and medium-sized export companies, major export companies and their suppliers. This was decided by the Government and did not require approval from the Riksdag.
The Swedish National Bank (the “Riksbank”) has announced that it will be lending up to SEK 500 billion to the banks to safeguard the supply of credit to Swedish companies and that it intends to buy securities for up to an additional SEK 300 billion during 2020. This was decided by the Riksbank and did not require approval from the Government or the Riksdag.
A central Government loan guarantee of SEK 100 billion has been proposed to make it easier for companies to access financing. The proposal means that the central Government will guarantee 70 per cent of new loans provided by banks to companies that are experiencing financial difficulty due to the COVID-19 virus but that are otherwise robust. The guarantee will be issued to banks, which in turn will provide guaranteed loans to companies. The loan guarantee primarily targets small and medium sized enterprises. However, there is no formal limit on company size to take part in the programme. The Swedish National Debt Office (Sw. Riksgälden) will administer the guarantee and it is proposed that each company be allowed to loan up to SEK 75 million, although exceptions can be made. The Riksdag will vote on the bill on 1 April 2020.

Temporary reduction of employer’s social security contributions

A temporary reduction of employers’ social security contributions will be proposed for the period 1 March to 30 June 2020. The proposal imply that employers only need to pay the old age pension contribution and that the reduction shall apply to up to 30 employees and on the portion of the employee’s wage that does not exceed SEK 25,000 per month. This entails a tax relief of up to SEK 5,300 per employee and month. To provide equivalent relief to sole traders (Sw. enskild näringsidkare), a reduction of individual contributions is also proposed. The Riksdag will vote on the bill on 3 April 2020.

Temporary change to rules for tax allocation reserves

The rules for tax allocation reserves will be temporarily changed so that sole traders and natural persons who are partners in Swedish partnerships severely affected by the COVID-19 outbreak will receive tax cuts. The new rules mean that 100 per cent of the taxable profits for 2019, up to SEK 1 million, can be set aside in the tax allocation reserve, which can then be set off against possible future losses. The Riksdag will vote on the bill on 3 April 2020.

Liquidity reinforcement via tax accounts proposed

Companies will be allowed to defer payment of employers’ social security contributions, preliminary tax on salaries and value added tax that are reported monthly or quarterly. The payment respite covers tax payments for three months and is to be granted for up to 12 months. The Riksdag passed the bill on 26 March 2020.

Short-term layoffs

The proposal on short-term layoffs is based on a previous proposal on a new system of government support in the event of short-time work, but the degree of subsidy has been significantly increased. This proposal means that employers’ wage costs can be halved, while employees receive more than 90 per cent of their wage. The aim is for affected companies to be able to retain their staff and rapidly gear up again when the situation improves. The Riksdag will vote on the bill on 2 April 2020.

Temporary decrease in rental costs in vulnerable sectors

In its additional amending budget, the Government is allocating support of SEK 5 billion to reduce fixed rents for vulnerable sectors such as durable consumer goods, hotels, restaurants and certain other activities. Under this initiative, landlords who reduce fixed rents for tenants in these vulnerable sectors during the period of 1 April to 30 June will be able to apply for support to compensate part of the rental reduction. The compensation provided will be at most 50 per cent of the reduction in fixed rent, but at most 25 per cent of the original fixed rent. As this initiative involves state aid, it must be approved by the EU before being passed through the Riksdag.

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Philip Heilbrunn, Partner

UK

Across the budget on 11 March 2020 and the subsequent COVID-19 briefing meetings the Chancellor of the Exchequer has announced a number of measures to ease the impact that COVID-19 and the accompanying social distancing measures is having and will continue to have on UK businesses. A range of measures have been announced targeted at both small and medium sized businesses and larger companies.

The key measures are:

1) the introduction of a new Covid Corporate Financing Facility designed to provide a quick and cost effective way to raise working capital for larger firms who are facing cashflow and working capital issues due to the COVID-19 outbreak;

2) an extension of the new Business Interruption Loan Scheme to provide loans of up to £5,000,000 to small and medium sized businesses;

3) a business rates holiday for nurseries and all businesses in the retail, hospitality and leisure sectors, so that no business rates will be payable for the 2020/2021 tax year;

4) provision of grants of £10,000 to businesses eligible for small business rate relief or rural rate relief;

5) businesses with a rateable value of between £15,000 and £51,000 will get a cash grant of £25,000;

6) businesses and employers with fewer than 250 employees as of 28 February 2020 will be able to claim a refund of up to 14 days statutory sick pay and expenditure, for any eligible employee off work due to COVID-19;

7) a deferral of all VAT payments for the period between 20 March 2020 and 30 June 2020 until January 2021;

8) HM Treasury will pay 80% of salaries up to £2,500 for up to 3 months of persons who were employed and cannot work due to the COVID-19 outbreak (backdated to 1 March 2020);

9) HM Treasury will pay self-employed people who earn up to £50,000 a year and who have a tax return for 2019, a taxable grant worth 80% of their average monthly profits over the last 3 years up to £2,5000, if they have been adversely affected by COVID-19; and

10) all businesses and self-employed people in financial distress, and with outstanding tax liabilities, may be eligible to receive support with their tax affairs though HMRC’s Time to Pay service and

11) a new “future fund” aimed at high growth innovative companies facing financial difficulties who are finding it difficult to access other forms of government backing.

As a result of concerns that, whilst these are wide-ranging measures, there are gaps, in particular for those businesses that do not have a rateable value and mid-tier companies (the CBI estimate between 4-5,000 businesses fall within the gap between the Covid Corporate Financing Facility and the Coronavirus Business Interruption Loan) further measures were announced on 3 April 2020, including improved accessibility to the Business Interruption Loan Scheme and the introduction of the Coronavirus Large Business Interruption Loan Scheme.

Further details on the Future Fund scheme, Covid Corporate Financing Facility, Coronavirus Business Interruption Loan Scheme and Coronavirus Large Business Interruption Loan Scheme are set out below. We expect that these schemes will be subject to very high demand and are looking at ways to help streamline the process by the sharing of information and best practice.

Future Fund Scheme

The Future Fund scheme opened to applications on 20 May 2020. Under the scheme, the government will provide convertible loans ranging from £125,000 to £5m to certain high growth UK-based innovative companies, subject to at least equal match funding from private investors. The scheme is currently open until the end of September 2020.

Eligibility

In order to be eligible, the business must:

1) have been incorporated on or before 31 December 2019;

2) be based in the UK;

3) have raised at least £250,000 in equity investment between 1 April 2015 and 19 April 2020; and

4) either generate half or more of its revenue from UK sales and/or have half or more of its employees based in the UK.

In addition, the company must not have any of its shares or other securities listed, and if it is part of a corporate group it must be the ultimate parent company. The Future Fund is only available if there is funding from private investors, and will match up to 100% of the amount provided by those investors up to a maximum of £5m.

Investors are also subject to eligibility requirements, with the following categories of investor being able to invest in the convertible loan agreement:

a) an investment professional;

b) a high net worth company, unincorporated associated or high value trust;

c) a certified sophisticated investor or a self-certified sophisticated investor;

d) a certified high net worth individual;

e) an equivalent professional, high-net worth, institutional or sophisticated investor in accordance with applicable law and regulation in such investor’s home jurisdiction;

f) an association of high net-worth or sophisticated investors; or

g) an investor capable of being classified as a “professional client”

These categories are defined in the Financial Promotion Order 2005 and the FCA Rules.

Terms of the loan

The Future Fund scheme is based on a convertible loan agreement which is predefined and cannot be negotiated. The loan will mature after 36 months and can only be repaid early with the agreement of all investors.

The loan has a minimum 8% per annum non-compounding interest charge which will accrue until the loan converts, at which point the interest will either be repaid or will be converted into equity.

In addition, the loan cannot be used for any of the following purposes:

a) to repay any borrowings from a shareholder or shareholder-related party (not including bank borrowings);

b) to pay any dividends or other distributions;

c) to pay any bonuses or discretionary payments for the 12-month period following the date of the onvertible loan agreement; or

d) to pay any advisory fees.

Covid Corporate Financing Facility (“CCFF”)

Background

The CCFF is a new UK governmental lending facility that has been made available to larger investment grade (“IG”) businesses who meet the applicable eligibility criteria from 23 March 2020. The CCFF:

is operated by the Bank of England (“BoE”);
will purchase commercial paper with a maturity of up to one year (“CP”) from eligible companies; and
will be available to purchase new CP for at least 12 months up to 23 March 2021, and for as long as deemed necessary by the BoE.

According to the BoE, as at 19 May 2020, over 230 businesses have been approved as eligible to access the CCFF, with the CCFF having purchased circa £18.8bn of CP from 55 businesses and authorised the purchase of a further £38.8bn, including from another 68 businesses.

CP is a commonly used type of unsecured, short-term debt instrument issued by corporations, typically used for meeting short-term liabilities.

CP is usually issued at a discount from face value and reflects prevailing market interest rates – this means the return to the investor is equal to the difference between the issue price and the face value of the CP.

The BoE has confirmed that this approach will also apply to CP eligible for purchased by the CCFF, with the CP being discounted using a rate based on the maturity-matched overnight index swap (“OIS”) rate, as determined by the BoE on the day of purchase by reference to the credit rating of the issuing entity as follows:

Rating (or equivalence to rating)	Spread to OIS
A1/P1/F1/R1	20 bps
A2/P2/F2/R2	40 bps
A3/P3/F3/R3	60 bps

The maximum amount available under the CCFF is also calculated by reference to the credit rating of the issuing entity. An indicative guide to the maximum limit pre-approved for different ratings levels is set out in the table below, although applicants should note that the limits set will be adjusted down at the BoE’s discretion in some cases (for example where they exceed 50% of the applicants’ average revenues over recent years). These limits will be kept under constant review and applicants are encouraged to disclose to the BoE the total amount that they wish to borrow:

Rating (or equivalence to rating)	Initial issuer limit
A1/P1/F1/R1	Up to £1bn
A2/P2/F2/R2	Up to £600m
A3/P3/F3/R3	Up to £300m

In terms of availability, on 19 May 2020, prospective applicants should note that the BoE issued further guidance stating that any applicants who wish to issue CP to the CCFF for a term extending beyond 19 May 2021 will be expected to provide a letter addressed to HM Treasury that commits to showing restraint on the payment of dividends and other capital distributions and on senior pay during the period in which their CP is outstanding. This is a new requirement that does not currently apply to CP already issued or which will be issued but has a maturity falling before 19 May 2021.

Eligibility

HM Treasury, alongside the BoE, have confirmed that the CCFF will be available to companies which are “fundamentally strong” and make a “material contribution to the economy”. UK incorporated companies (including those with overseas holding companies) with a genuine business in the UK, will normally meet this requirement, but the following will be taken into account, if the company:

is a significant employer in the UK;
has their headquarters in the UK;
generates significant revenues in the UK; and/or
has a significant customer base in the UK.

Applicant companies do not need to have issued CP previously but are required to demonstrate they were in sound financial health prior to the shock, allowing the BoE to look through temporary impacts on balance sheets and cash flows from the shock itself.

In practice, applicants will meet the “sound financial health” test if they can demonstrate that they held, as at 1 March 2020, a minimum short-term credit rating of A3/P3/F-3/R3 or above, or a long-term rating above BBB-/Baa3/BBB-) from at least one of Standard & Poor’s, Moody’s, Fitch or DBRS Morningstar (a “Public IG Rating”). Please note that where an applicant has different ratings from different agencies, and one of those is below IG, then it will not be eligible:

However, where prospective applicants do not have a Public IG Rating, there are two other options, which will be accepted by the BoE in lieu of a Public IG Rating:

Option 1: Written confirmations from an applicant’s primary lenders that they considered the applicant to be rated IG as of 1 March 2020. The BoE has clarified that an applicant should normally obtain IG confirmations from at least three banks and should not have been allocated a speculative (ie sub-IG) grade rating from any of its banks, however;

an applicant who has been allocated a speculative grade rating from one or more of its lenders may be accepted provided that the average of all its bank ratings is at least BBB/Baa2/BBB/BBB; and
the minimum number of IG confirmations that the BoE will accept is two, but only where both rate the applicant as strongly investment grade (BBB+/Baa1/BBB+/BBB(High) or above.

Applicants will be asked to confirm that they have disclosed all bank ratings related to their principal direct on-balance sheet borrowings (such as syndicated loans, bilateral loans and revolving credit facilities).

Option 2: A private assessment of credit quality from one of the major credit rating agencies (CRAs). The credit assessment should be as at 1 March 2020 in a form that can be shared privately with the BoE and HMT for the purposes of accessing the CCFF. The largest CRAs have developed appropriate forms of credit assessment for this purpose and the forms that the BoE will accept are listed here.

The BoE notes that Option 2 (obtaining a private credit assessment from a CRA) remains available to applicants even if the BoE has not deemed them to be IG-equivalent under Option 1 above, so recommends that applicants may wish to pursue Option 1 first.

Non-bank financial companies are in principle eligible to issue CP for purchase by the CCFF provided they make a material contribution to the UK economy as noted above. CP issued by banks, building societies, insurance companies and other financial sector entities regulated by the BoE or the Financial Conduct Authority (“FCA”) will not be eligible for purchase by the CCFF. Leveraged investment vehicles or companies which are predominantly active in a business subject to financial sector regulation, will also not be eligible.

Large housing associations that continue to be assessed as V1 grade for viability from the Regulator for Social Housing should also be eligible to issue CP for purchase by the CCFF. The BoE will also assess housing associations’ revenue streams. Further details specific to housing associations is set out here.

We note that companies will need to consider what authorisations they require to issue the CP. Also, certain corporate reorganisation may be required to comply with the detailed criteria requirements.

Terms of the CP

The CCFF will purchase sterling-denominated CP from eligible companies if the CP:

has a maturity of between one week to 12 months;
is issued directly into Euroclear and/or Clearstream;
is governed by English law and subject to the jurisdiction of the English courts;
does not contain any non-standard features, e.g. extendibility or subordination; and
if issued by a company which is not the primary entity in its group, is guaranteed by the parent company in a form acceptable to the CCFF.

Eligible companies will be required to sign a confidentiality agreement with the CCFF. The form of this is accessible here.

From 19 May 2020, CP issued to the CCFF may be repaid early at the option of the issuer, subject to certain terms and conditions. Requests for repayment before the end of June 2020 will not be subject to additional fees, after which the BoE has stated that it will usually apply an early repayment fee of 5bps.

Eligible companies will be required to sign a confidentiality agreement with the CCFF. The form of this is accessible here. Prospective applicants should note that while the names of issuers who have been approved as eligible but have not yet issued any CP will not be disclosed publicly, on 19 May 2020, the BoE announced that from 4 June 2020, the names of businesses that have issued CP to the CCFF, as well as the amounts issued will be published by the BoE on a weekly basis.

How to access the CCFF

The BoE notes that companies wishing to access the CCFF are required to do so via a bank (acting as dealer) and that such companies should, therefore, liaise with their investment bank, who will be able assist with their issuance of the CP. Not all banks have desks that deal with CP issuance. UK Finance provide a list of banks that are able to do so here.

To discuss eligibility, potential issuers may contact: CCFFeligibleissuers@bankofengland.co.uk.

Applicants who have satisfied themselves that they will be considered eligible should complete the issuer eligibility form which can be downloaded here. This should then be submitted to the BoE at CCFF-Applications@bankofengland.co.uk. along with a signed copy of the issuer undertaking and confidentiality agreement and the other documents requested in the issuer eligibility form.

In order to issue CP, a company will need (unless it has an existing CP programme) to set up a CP programme, which is done by entering into a series of legal documents based on the standard form ECP documents published by ICMA, together with certain additional documents required by the CCFF, which are listed here. Such CP programmes do not have to be set up for the exclusive purpose of accessing CCFF funding, so companies would be free to use them in the future for other short term debt fund-raising.

Once it has a CP programme in place and has been confirmed as eligible by the BoE, an eligible company that wishes to sell CP to the CCFF should submit its offer to the BoE’s Sterling dealing desk between 10-11.00 am (London time) each day. Purchases by the CCFF will be subject to a minimum purchase amount per individual issue of CP from each issuer of £1,000,000 (nominal amount). The CCFF’s purchase of commercial paper will normally settle two days after the trade date.

The full briefing note jointly published by the BoE and HM Treasury can be accessed here and further information can be accessed here.

Coronavirus Business Interruption Loan Scheme (“CBILS”)

A temporary loan scheme delivered by the British Business Bank launched the week commencing 23 March 2020 to support small and medium sized businesses, who would otherwise not have the required security to access bank lending and overdrafts. To be eligible for the CBILS, the business must:

1) be a UK based small or medium enterprise with a turnover of £45,000,000 or less per annum[9];

2) operate within an eligible industrial sector (a list of ineligible business sectors are set out below);

3) have not received state aid of more than €200,000 over the previous 2 financial years[10]; and

4) be applying for the funding for business purposes;

5) have a borrowing proposal which, were it not for the Covid-19 pandemic, would be considered viable and for which the provision of finance will enable trading out of any short-to-medium term difficulty;

6) generate more than 50% of its turnover from trading activity; and

7) use the CBILS-backed facility to primarily support trading in the UK.

Businesses from all sectors can apply except:

1) banks and building societies;

2) insurers and reinsurers (but not insurance brokers);

3) public sectors organisations;

4) employer, professional, religious or political organisations; and

5) trade unions.

Some Banks/Lenders have additional, specific criteria (or limitations) which are set out below:

Bank / Lender	Additional Criteria	Website
ABN-AMRO Commercial Finance	Not listed on website.	Here
Aldermore	Limited to loans of between £50k and £250k.	Here
Arkle Finance	Limited to loans for equipment finance from £5k to £250,000 (term 2 - -5 years), or term loans from £2.5k to £50k (limited to existing Arkle customers and term 3 months to 3 years).	Here
ART Business Loans	West Midlands only. Limited to £150k. Limited to existing customers due to high demand.	Here
ASKIF	Limited to loans from £10k to £60k. Requires applicants to have been trading for a minimum of 12 months.	Here
Bank of Ireland	Adopts BBB criteria.	Here
Bank of Scotland	Specific (lengthy) list of criteria (see website link). Mirrors BBB criteria mostly.	Here
Barclays	Specifically states group turnover must be less than £45m. Mirrors other BBB criteria.	Here
BCRS Business Loans	West Midlands only. Limited to £150k. Mirrors other BBB criteria	Here
Business Enterprise Fund	Limited to £250k.	Here
Calverton Finance	Only provided in conjunction with an Invoice Finance facility (not as a standalone loan).	Here
Chamber Acorn Fund Humber	Confirmed that although partnered in the CBILS, they have insufficient capital to participate at this time.	Here
Close Brothers	Limited to invoice finance customers.	Here
Clydesdale and Yorkshire Banks	Non-specific (adopts BBB criteria)	Here (Clydesdale) and Here (Yorkshire)
Compass Business Finance	Restricted to the manufacturing sector (printing, packaging, engineering). Mirrors other BBB criteria.	Here
County Finance Group	Not listed on website, but this lender specialises in financing industrial equipment and vehicles.	Here
Coutts Commercial Bank	Does not require any personal guarantee under the scheme (even beyond the £250k threshold). Security is limited to business assets.	Here
Coventry & Warwickshire Reinvestment Trust	Limited to Coventry and Warwickshire businesses.	Here
Cynergy Bank	Currently limited to existing Cynergy Bank customers only.	Here
Danske Bank	Non-specific (adopts BBB criteria)	Here
DSL Business Finance	Limited to loans between £1k and £50k.	Here
Enterprise Answers	Must be based in Cumbria, North Lancashire or The Yorkshire Dales. Only has a small allocation, and expects the average loan facility to be “well below £250k”.	Here
Finance For Enterprise	Loan limited of up to £250k. Business must be based either in Sheffield City, The Humber, Lincolnshire or North Midlands. Previous CBILS application must have been rejected by a traditional high street lender first.	Here
First Enterprise	Limited to loans of up to £150k.	Here
Funding Circle	Specific criteria. Requires 3 years of trading history.	Here
GC Business Finance	Limited to loans between £5k and £250kk. Business must be B2B and based in the North West. There also different criteria based on location of the business on the website.	Here
Genesis Asset Finance	Limited to £100k	Here
Haydock Finance	Not listed on website	Here
Hitachi Capital Business Finance	Adopts BBB criteria.	Here
HSBC	Must be an existing HSBC customer. Group turnover of less than £45m.	Here
Let’s Do Business Group	Limited to Essex, Sussex, Surrey, Suffolk and Kent. Only accessible if Bank declined in first instance. Turnover less than £41m (this might be a typo on the website). Limited to £50k but “may consider higher amounts for existing clients”. New customers need to show profitable trading for the last 2 years.	Here
Lloyds	Must be an existing Lloyds customer.	Here
Merseyside Special Investment Fund	Limited to North West and must be an existing client.	Here
Metro Bank	Group turnover must be less than £45m. Applications of £250k are considered without security. Over £250k security is required.	Here
Natwest	Non-specific (adopts BBB criteria) but specifies group turnover threshold.	Here
Newable	Limited to loans between £26k to £150k.	Here
OakNorth	Currently limited to existing borrowers only.	Here
Robert Owen Community Banking	Not listed on website	Here
Santander	Non-specific (adopts BB criteria)	Here
Secure Trust Bank	Not listed on website.	Here
Skipton Business Finance	Will only provide this facility to run alongside an “Invoice Finance” facility.	Here
South West Investment Group	Limited to £60k and to businesses operating in the South West region. Other criteria mirror BBB.	Here
Starling Bank	Limited to loans between £5k and £250k.	Here
The Co-operative Bank	Currently (due to high level of demand) providing CBILS to its existing customers first.	Here
RBS	Non-specific (adopts BBB criteria), but specifies group turnover threshold.	Here
TSB	Limited to loans of up to £250k (for overdrafts). Not currently offering terms loans under CBILS.	Here
UKSE	Limited to loans of up to £100k for businesses in specified sectors and areas only.	Here
Ulster Bank	Non-specific (adopts BBB criteria)	Here

Key Features of the CBILS

1) loans of up to £5,000,000 will be available;

2) the loan may be up to 6 years in term for loan and asset finance facilities and 3 years for overdrafts and invoice finance facilities;

3) lenders will not be charging any fees to companies under the scheme, but will pay a fee to the government for provision of the guarantee;

4) the government will cover the first 12 months of interest payments and any lender-levied fees;

5) the loan will not be limited to businesses that have been refused a loan on commercial terms but to any small viable business who has been affected by COVID-19;

6) the scheme may be used for unsecured loans of up to £250,000. Lenders are not permitted to request personal guarantees on loans under £250,000. For any loans over £250,000 personal guarantees will be limited to 20% of any amount outstanding on the loan after any other recoveries from business assets.[1]; and

7) the companies still remain liable for 100% of the debt.

Companies should be aware that as part of the application process for CBILS, directors are likely to be required to complete an assets and liabilities form. This may cause issues in certain businesses where for example there is an investor director.

The lender must be a partner of the British Business Bank and a list of finance providers can be found here. To access the CBILS, companies should contact the lenders directly.

Coronavirus Large Business Interruption Loan Scheme (“CLBILS”)

This new scheme was announced on 3 April 2020 as a result of concerns that many mid-tier companies and businesses that do not have a rateable value were finding themselves in the gap between the CBILS and CCFF.

The scheme launched on 20 April 2020 and will employ a similar delivery mechanism to that of CBILS. As for CBILS, accredited lenders will be able to provide borrowers with finance in the form of term loans, revolving credit facilities (including overdrafts), invoice finance and asset finance, and the lender will benefit from a government-backed guarantee of 80% of the loan. Under this scheme, loans of up to £25m may be provided to businesses with an annual turnover between £45m to £250m and loans of up to £50m may be provided to businesses with an annual turnover exceeding £250m. From 26 May 2020 however, the maximum loan available will be increased to the lower of 25% of turnover or £200m. There is no upper limit for access to this scheme and the loans will be provided for up to three years.

To be eligible for CLBILS, the borrowing business must:

1) be based in the UK;

2) have an annual turnover of over £45m;

3) self-certify that it has been adversely affected or impacted by COVID-19; and

4) that it has not yet received a facility under the CCFF.

In addition to the above criteria, those borrowing more than £50m will be subject to certain restrictions on dividend payments, share buybacks and executive pay for the duration of the loan. The business must also show that it has a borrowing proposal in place which the accredited lender would consider viable, if not for COVID-19, and which the lender believes will enable the business to trade out of any short-term to medium-term difficulty.

As with CBILS, there are specific types of businesses which are ineligible to apply, namely:

1) credit institutions, insurers and reinsurers;

2) building societies;

3) public-sector bodies;

4) further-education establishments (if they are grant-funded); and

5) state-funded primary and secondary schools.

The British Business Bank has confirmed that companies with private equity investors are not excluded from CLBILS, and will be treated as a separate entity to the private equity investors and their other portfolio investments and therefore would (subject to meeting all other criteria set by the accredited lenders) be eligible for a separate loan under CLBILS.

Similar to CBILS, no personal security may be required by the accredited lenders for loans under £250,000. Personal security may be required for loans exceeding £250,000, but claims on personal security may not exceed 20% of the losses incurred by the lender (i.e. that part of the loan that is not government backed). The borrowing business remains liable for 100% of the debt at all times.

Unlike CBILS, the government will not cover any interest or fee payments that are due to the lender. Decisions on whether a company is accepted into the CLBILS scheme sits with the accredited lenders who will also have their own internal credit requirements and eligibility criteria to apply when they make a decision.

From 26 May, further information is available here.

Further Guidance

Businesses eligible for business rate relief, or a grant will be contacted by their local authority.
For access to the time to pay service, HMRC have set up a dedicated helpline at 0800 0159 559.

Government launches Future Fund for high-growth companies

On 20th April, the UK Government announced a £500m “Future Fund”, as part of its package of measures to support businesses in response to the coronavirus.

Read the full article here >

[1] Lenders are taking differing approaches as to whether they require personal guarantees but the British Business Bank has confirmed that a Lender cannot ask for a personal guarantee which extends to recourse against a person’s main home.

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Simon Waller, Partner Head of the Finance and Restructuring Group

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Sarah Paul, Partner

Footnotes

[1] Are qualified as small-medium enterprises those enterprises having less than 250 employees and meeting one of the following requirements: (a) annual revenues not exceeding EUR 50 million or (b) balance sheet assets not exceeding EUR 43 million.

[2] At the beginning of the COVID-19 emergency, public measures regarded just the so called “red zone”, which only included the cities where the virus was spreading the most. As a mere example, the red zone included the cities of Codogno and Vo’ Euganeo. Although, at the beginning of March the Italian Government extended the “red zone” to the entire Italian territory.

[3] Invitalia is a public agency promoting investments and funding for Italian enterprises. The financings are usually granted after a competition, which is opened only to those eligible in accordance with the relevant competition notice.

[4]The Central guarantee fund is a public institution aimed at supporting, as guarantor, small-medium enterprises in their funding process.

[5] If a corporation has different ratings from different agencies, and one of those is below investment grade then the CP will not be eligible.

[6] It remains unclear for group companies whether the £45m turnover threshold applies to the entire group, or if each individual company within the group is assessed separately. This has been queried with the British Business Bank. The British Business Bank has not been able to confirm this position, but have indicated that it is very likely that the threshold for eligibility is assessed on the annual turnover of the group as a whole. British Business Bank have stated that they will provide further clarification on this point going forward.

[7] Lenders are taking differing approaches as to whether they require personal guarantees but the British Business Bank has confirmed that a Lender cannot ask for a personal guarantee which extends to recourse against a person’s main home.

[8] If a corporation has different ratings from different agencies, and one of those is below investment grade then the CP will not be eligible.

[9] It remains unclear for group companies whether the £45m turnover threshold applies to the entire group, or if each individual company within the group is assessed separately. This has been queried with the British Business Bank. The British Business Bank has not been able to confirm this position, but have indicated that it is very likely that the threshold for eligibility is assessed on the annual turnover of the group as a whole. British Business Bank have stated that they will provide further clarification on this point going forward.

[10] We note that this has now been removed from the website of the Government and the British Business Bank so clarity is required over the applicability of this requirement.

[11] Lenders are taking differing approaches as to whether they require personal guarantees but the British Business Bank has confirmed that a Lender cannot ask for a personal guarantee which extends to recourse against a person’s main home.

Simon Waller
Product Group Head
+44 207 919 0617
+44 207 919 0617

Sarah E. Paul
Partner
+1 212 301 6587
+1 212 301 6587

Michael Yau
Partner
+852 2186 3237
+852 2186 3237

Piaras Power
Partner
+353 1 6644 216
+353 1 6644 216

Pim van Leersum
Partner
+31 20 5600 534
+31 20 5600 534
Connect with Pim van Leersum on LinkedIn

Juan E. Díaz Hidalgo
Partner
+34 91 429 43 33
+34 91 429 43 33
Connect with Juan E. Díaz Hidalgo on LinkedIn

Teresa Villarroya Vargas
Partner
+34 91 429 43 33
+34 91 429 43 33
Connect with Teresa Villarroya Vargas on LinkedIn

This information is for guidance purposes only and should not be regarded as a substitute for taking legal advice. Please refer to the full terms and conditions on our website.

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