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In order to ensure financing in times of the corona crisis and to give citizens some financial breathing space, the federal government has taken drastic measures. After consultation between the authorities and the banking sector, the decision was taken that banks will commit to granting suspension of payment to viable enterprises, self-employed people and individuals until 30 September 2020, without additional costs.
At present a number of practical matters are still unclear, e.g. whether the term of the loans will be extended by 6 months or whether the deferred capital will have to be reimbursed during the remainder of the term. We will continue to follow up on this matter and will naturally inform you once the practical details are known.
An enterprise must be viable in order to benefit from the measure.
A viable enterprise or self-employed person is viable if:
• they were not in arrears of payment on 1 February 2020, or
• were in arrears of payment for less than 30 days on 29 February.
An additional question for enterprises is whether only payment of capital will be deferred or payment of both capital and interests.
It is currently also still unclear whether this is the only requirement or whether the affected enterprises must also be able to prove that the financial difficulties are due to the Corona crisis.
We will follow up on both of these matters and will inform you once the final arrangements are known.
In addition, a government guarantee for new loans will be provided.
Again, this guarantee will be granted to viable enterprises and self-employed people. The arrangement will be applicable to new loans with a maximum term of 12 months. These loans must be granted until now and 30 September 2020.
The maximum interest rate for the new loans is 1.25%, exclusive of the fee. The fee can be maximally 0.25% for SMEs and 0.50% for large companies.
The loans are guaranteed up to a maximum of 50 million euro per enterprise. For amounts over 50 million euro an extra approval of the authorities is required.
An arrangement was provided in order to prevent the banks from having to cover the losses alone.
This arrangement is the following:
• Losses up to 3%: The bank has to cover the losses
• Losses 3% - 5%: One half is covered by the bank, the other half by the government
• Losses > 5%: 80% of the losses are covered by the government.
In the past ten years the credit losses amounted to 1% maximally. This means that the government will only intervene if an exceptional crisis occurs, causing the losses to be three times higher than during the financial crisis of 2007-2008.
This guarantee arrangement will be implemented by means of a royal decree, after the government will have received specific powers from parliament.
Private individuals can also benefit from suspension of payment (capital and interests) until 30 September for their mortgage loans.
If private individuals want to benefit from the suspension of payment, they must submit an explicit request with their bank and be able to prove that they are financially impacted by the coronavirus.
Example: a family with two children; the husband is technically unemployed by the corona crisis but the wife is still able to work. Their savings amount to € 500,000. Can this family benefit from the suspension of payment?
No, the measure only applied to people who are in a difficult financial situation due to the crisis.
If you need help or advice in order to benefit from one of the above measures, we will gladly assist you. You can contact us by phone at 051 26 82 68 or by sending an e-mail to firstname.lastname@example.org.