As a result of the corona crisis, many private persons and enterprises suffered from a loss of income. That is why Febelfin and the National Bank drew up a support measure on 22 March 2020, whereby individuals and companies can ask for an extension of their credits. Recently, the initial payment extension was extended and set out in 2 new charters published by Febelfin. Below you will find a short summary.
One of these measures concerns the payment deferral for corporate loans. Companies had the option of deferring repayments of their loans for a period of up to 6 months. Interest was still due during this period.
For individuals a similar arrangement was worked out whereby the repayments of mortgage loans could be deferred. In contrast to business loans, interest could also be deferred.
However, in order to invoke this scheme, some conditions applied. Companies had to show that they had suffered a loss of turnover during this period and that they had no arrears with their bank, tax authorities or National Social Security Office before the outbreak of the pandemic. Private individuals had to demonstrate that their income was limited and, in addition, that they had less than EUR 25,000 in liquid assets as a family.
In response to ongoing problems, this mechanism was extended in September for 3 months or until December 31, 2020 at the latest.
In early December it was announced that this measure will be extended again for three months until March 31, 2021. An important note, however, is that both companies and individuals cannot invoke this measure for longer than 9 months. This means that companies and individuals who have already relied on the payment extension since March 2020 will no longer be able to use this measure.
Like the initial arrangement, this extension is not valid for leasing and factoring agreements and large companies cannot use it.
Application: A payment deferral can only be applied for credits that were granted before April 1, 2020. Applications for payment deferral must be made in a timely manner and no later than 10 calendar days before the credit is due.
In addition, the bank can always grant additional deferrals on certain loans without obligation, but this is not as easy as the deferrals determined by the charters and may involve administrative costs.
Corporate Credit Guarantee Scheme
Banks are also increasingly offering businesses a bridge loan. This credit should enable the applicant to meet current obligations during the period of closure or decline in sales.
The advantage of this bridging loan is that the bank can call on the federal government's guarantee scheme. The new credit can be guaranteed, subject to payment of an additional premium, without the company having to provide guarantees itself. The existing corona guarantee scheme will be extended for SME loans concluded until June 30, 2021. This measure is not yet operational. It will only enter into force after publication of the Royal Decree.
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