Soft loans instrument for SMEs as a reaction to the COVID-19 pandemic

Description of the soft loans instrument

• New programme of indirect financial aid dedicated to small and medium-sized enterprises (SMEs) to bridge the period of the current health and safety measurements against spread of the coronavirus SARSCoV19.
• Main goal of the instrument is to provide guarantees to the banks and motivate them to grant loans for SMEs. There is also the possibility of the interest rate bonus (max. by 4% p.a.) after the 12 months since the first loan drawdown.
• The call is dedicated for financial institutions (banks) certified to provide loans in Slovakia.
• Banks must express their interest in joining the scheme no later than 4th May 2020. Just then it is possible to grant a soft loan.

Objective of the instrument:

• To help SMEs to cope with limited access to capital, caused by events out of the enterprise’s control, and allow them implementation of socially oriented measures aimed to maintain jobs.
• De Minimis conditions apply to the instrument (the aid for a single enterprise cannot exceed 200,000 €).

Source of financing

• Operational Programme Integrated Infrastructure through the National Development Fund II. (NDF II), which is administrated by the Slovak Investment Holding (SIH)

Eligible SMEs

• are established and do business in Slovakia (including Bratislava region);
• do not meet the definition of an "undertaking in difficulty" (in case they are more than three years old);
• do not belong to the highest credit risk rating category (according to the bank's internal rating);
• do not operate in following sectors: fishery and aquaculture and the primary production of agricultural products.
• There is no claim by the European Commission (against the SME) to return the (previously granted) state aid.
• They must not be convicted for the criminal offence connected to their business (fraud, corruption, etc.)
• There is no final decision imposing sanctions for the breach of the prohibition of illegal employment.

Eligible credit purposes

• Procurement of tangible and intangible assets related to maintaining or increasing the number of jobs, including the transfer of ownership within enterprises and additional working capital.
• Working capital related to maintaining or increasing the number of jobs and establishing, strengthening or expanding the business of SMEs (e.g. purchase of stocks/goods /services, utilities, etc.).
• Working capital related to maintaining or increasing the number of jobs to support special approach to disadvantaged social groups and to implement socially-oriented measures (e.g. maintenance of jobs, etc.).
• Working capital to support SMEs with limited access to capital due to events out of the enterprise’s control.

Conditions related to soft loans and interest rate bonus

• Maximum loan amount: EUR 1,180,000.
• Maximum SIH coverage/guarantee per individual loan - 80%
• Minimum maturity: 3 years (36 months) including postponed payments.
• Maximum maturity: 4 years (48 months) including postponed payments.
• The repayment of principal and interest may be postponed for up to 12 months since the beginning of first drawdown of the loan.
• Interest rate: the interest rate may be reduced by an interest subsidy of max. 4% p.a. (only up to a final interest rate of 0%). SIH expects the final product (including interest rate bonus) at the level of 0-2%.

The conditions for granting the interest rate bonus (after 12 months from the first loan drawdown):

• For 12 months since the date of the first loan drawdown, SMEs will maintain the average level of employment of regular employees compared to the previous situation.
• In case that SME had overdue liabilities (at the time of granting) more than 1 month on social or health contributions, the SME will pay such liabilities from the granted loan.

Fees for provision / increase / guarantee / early repayment: 0%.