On March 22, 2020, the banks, government and the National Bank developed measures to support companies and individuals as much as possible during the crisis. On March 31, 2020, these measures were concretely laid out in 2 charters:
The charters were published by Febelfin (see above).
Enterprise support measures consist of two components:
- on the one hand, capital repayments of current credits (investment credits, cash credits and fixed advances) can be deferred for six months;
- on the other hand, a format is being established whereby companies can apply for bridge loans to cover current and future liquidity shortfalls.
Capital deferral for existing credits
When a company wishes to defer its capital repayments of current loans, a specific procedure must be followed. This will be different for each bank.
Please note that not every company is eligible for this measure. For example, the company must be able to effectively demonstrate that it is adversely affected by the current crisis and was not allowed to be in arrears prior to the start of the crisis. All conditions related to these measures are clearly defined in the charter.
This charter also clearly states which credits are eligible. Leases, for example, are not eligible. However, this does not mean that the credit institution will not offer you a solution for the payment of the lease fees. Many banks are currently working out their own solution whereby it is possible to postpone the payment of your lease for six months or to use a bridging loan to absorb these payments. However, the bank is under no obligation to offer you a solution in contrast to conventional investment loans.
Additional bridging credits
The application for a bridging loan to cover the liquidity shortfalls caused by the current crisis is made in the same way as a conventional credit application. The charter comes into play here only when the company does not have sufficient guarantees to obtain the requested credit. In this way, SMEs that take out a loan as a result of the corona crisis can call on the government's guarantee scheme more cheaply.
However, this is only if the conditions are met. For example, the term of the credit must be limited to 12 months and the interest rate may not exceed 1.25%. If these conditions are met, the rate for the guarantee is 0.25% instead of the standard rate of 0.5% per year. However, this standard rate still applies to large enterprises.
A similar charter has been developed for private individuals. This charter, which can also be found via the link above, relates to the repayment of mortgage loans. Like professional loans, the capital repayments of mortgage loans can be deferred for six months if certain conditions are met. For example, the borrower must be able to demonstrate that his income was limited by the crisis. However, an additional condition is that the borrower(s) must not have more than EUR 25,000 available in their bank accounts at the time of this application.
Of course, you can always contact your client manager to guide you through the negotiations with the bank and the application of the capital deferral.