In order to secure financing in times of the corona crisis and to provide the necessary financial breathing space for its citizens, the federal government has taken drastic measures. After consultations between the government and the banking sector, it was decided that the banks will commit to granting viable companies, the self-employed and individuals payment deferrals until September 30, 2020, at no additional cost.
At present, a number of practical matters are still unclear, e.g. whether the credits are extended by 6 months or whether the deferred capital must be made up during the remaining term. We are continuing to monitor this and will of course communicate further once the practical details are known.
To avail of the measure, the business must be viable.
Viable means that the businesses/self-employed:
- were not in arrears on February 1, 2020, or
- were in arrears of less than 30 days on February 29.
For companies, the additional question is whether only capital deferral or deferral of interest and capital will be provided.
At present, it is also unclear whether this is the only requirement and whether affected companies must be able to demonstrate that their financial difficulties are due to the Corona crisis.
Both elements will be further monitored by us, there will be further communication about this as soon as this is definitively known.
In addition, a government guarantee is provided for new credits.
This scheme is reallocated to the viable businesses and self-employed. The scheme applies to new credits with a maximum term of 12 months. These credits must be granted between today and September 30, 2020.
The maximum interest rate for the new loans is 1.25%, excluding fee. The fee may not exceed 0.25% for SMEs and 0.50% for large enterprises.
Credits are guaranteed up to a maximum of 50 million euros per company. Amounts higher than €50 million require additional government approval.
So that the banks would not have to bear the losses alone, a scheme was provided.
- Losses up to 3%: The bank must bear these losses
- Losses 3% - 5%: Half is borne by the bank and half by the government
- Losses > 5%: These losses are borne by the government for 80%.
Over the past ten years, credit losses have amounted to a maximum of 1%. The government will thus intervene only when an exceptional crisis occurs where losses are three times greater than during the 2007-2008 financial crisis.
This guarantee scheme will be implemented through a royal decree after the government is granted special powers by parliament.
Individuals can also enjoy payment deferral (capital and interest) until September 30 for their mortgage loans.
If an individual wishes to take advantage of the payment extension, they must explicitly request it from their bank and it must be possible to demonstrate that they have been financially affected by the coronavirus.
Example: a family with two children where the husband is technically unemployed due to the corona crisis but the wife can still go to work. In addition, they have a savings pot of EUR 500,000. Will the family be able to call on the payment deferral?
No, the measure is provided only for people who are in a difficult financial situation due to the crisis.
If you need help or advice to use any of the above support measures, we will be happy to help. Contact us at 051 26 82 68 or by email to firstname.lastname@example.org.
Finally, we would like to inform you that we at Titeca have taken all the necessary measures in connection with the coronavirus and are closely following the recommendations of the FPS Public Health. In order to avoid contamination of employees and customers within the offices, we have all digital tools deployed so that our employees from home be able to work.
We stay as always reachable on the known phone number and/or via mail. In addition, we also provide permanency in the offices from Monday through Friday.