Already on March 27, the guarantee scheme (state guarantee) for bridging loans was announced as a remedy for the companies suffering from the Corona crisis. Through this measure, banks are encouraged to provide short-term loans to healthy companies that are experiencing financial difficulties due to the corona crisis.
The guarantee scheme applies to all new loans with a maximum maturity of 12 months and is limited to a credit amount of EUR 50 million. This state guarantee encourages banks to still provide credit to companies with liquidity problems. However, banks are not obliged to respond to all credit requests. A well-prepared credit file is therefore of crucial importance for this credit request.
The guarantee scheme is always complementary to the capital deferral. The two schemes are therefore not mutually exclusive. On the contrary, at certain banks it is not possible to take out a bridging loan if no postponement of payment has been requested.
The eligibility requirements are therefore similar to those of the capital deferral:
- the company had to be viable and have no arrears in its existing loans, taxes or social security obligations on February 29, and
- the credit amount must be used to finance activities in Belgium.
This means that companies that were unable to meet their obligations before the outbreak of the corona crisis cannot use this scheme.
Maximum interest rate
All loans under this guarantee scheme, will have a maximum interest rate of 1.25% per annum. The banks have indicated that, in principle, they will always apply this maximum rate. In addition to the interest rate, a fee must be paid for the government guarantee. This fee is 0.25% per annum for SMEs and 0.50% for other enterprises, taking into account the European SME definition. In addition, a one-time filing fee and periodic management fee may also be charged.
Banks, unlike the capital deferral, have no obligation to approve the credit request. Those who cannot use a bridge loan must look for other ways to meet their liquidity needs.
Here, the Flemish government agency PMV can provide a solution in some cases. They will make 250 million euros available to provide subordinated loans to start-ups, scale-ups and SMEs. However, the details are not yet known but this will be followed up further by us.
In addition, PMV also facilitates other financial products that can be used during this crisis. For example, every SME can call on a win-win loan where friends or family provide credit to the company or the extensive guarantee scheme that was already available before this crisis.