In response to the great credit needs of many companies, the financial support measures are being further expanded by the Flemish government. After the extension of the capital deferral scheme, the expansion of the government guarantee and the win-win loan now follow.
Extension of Government Guarantee to loans with a maturity of 12 - 36 months
The use of the state guarantee facilitates the granting of credit for SMEs. Indeed, the guarantee ensures that banks can recover 80% of the credit amount from the Flemish government should the enterprise fail to repay the credit.
There was already a regulation for new credits with a term of up to 12 months. The July 20, 2020 law extends this regulation to credits with a term of 12 to 36 months.
Companies can, without obligation and in consultation with their bank, call on a government guarantee when they take out a credit with the following characteristics:
- Duration: 12 to 36 months
- Interest: maximum 2% per year (+ premium 0.50 % per year)
- Application: between July 24 and December 31, 2020
- Additional costs:
- Government guarantee premium of 50 bps (This premium is calculated based on the amount of credit and the duration of the credit)
- File costs
- Management fees
The measure applies to all non-financial SMEs, with the exception of management and patrimonial companies, as long as the guaranteed credits are used for the Belgian activity of this SME. A separate scheme is also provided for companies in difficulty so that they can still be eligible in certain cases. This is in contrast to all previous government financial support measures.
As with the initial scheme for credits with a maturity of up to 12 months, this guarantee does not guarantee the granting of a credit. However, unlike the existing guarantee scheme, there is no requirement to first resort to the deferred payment scheme.
Extension of win loan
By further extending the features of the existing win-win loan, the Flemish government wants to encourage private individuals to provide credit to SMEs through a subordinated loan. In exchange for this credit, in addition to the usual interest rate, the investor receives an annual tax credit of 2.5% on the outstanding amount.
In response to the current corona crisis, the following features of the win-win loan were permanently changed:
- The maximum amount per investor (natural person) increases from EUR 50,000 to EUR 75,000
- The maximum amount per company (borrower) increases from 200,000 to 300,000 EUR
- The term, previously always eight years, becomes flexible between 5 and 10 years
- Small shareholders, who own up to 5% of the shares, can now also make a win loan.
Furthermore, in response to the current crisis, the following temporary changes were made:
- The recovery for the investor in case of failure is increased from 30% to 40%. This higher guarantee applies to all agreements concluded up to and including December 31, 2021, for the entire term.
- A voluntary extension of maturity is allowed for credits maturing in 2020 by up to two years.
The interest rate on the win loan was not adjusted as a result of the current amendments and remains at a minimum of 0.875 % and a maximum of 1.75 % (income year 2020).
The legislation regarding the above changes has already been approved but not yet published. The application process is currently being adjusted so that the credit with the new features can be applied for as soon as possible.
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