A new soft loans instrument for SMEs is being launched as a result of the COVID-19 pandemic

Tuesday, 31. March 2020
Slovak Government launches through the Slovak Investment Holding, a.s. (SIH) a new program of indirect financial aid for small and medium-sized enterprises (SMEs) to bridge the period of limited access to capital, caused by the COVID-19 pandemic, to cope with financial difficulties and to maintain jobs.

The program consists of guarantees for financial institutions (i.e. banks certified to provide loans in the Slovak Republic), which will subsequently provide preferential bridging loans to SMEs and, given that employment will be maintained, also with interest bonuses.

Banks must express their interest in joining the scheme no later than 4th May 2020. Only then it is possible to provide preferential loans to SMEs.
The source of the financial assistance is the Operational Programme Integrated Infrastructure through the National Development Fund II., a.s.. The current allocation of EUR 38 million is likely to be increased later.

Aid under this financial instrument is granted following the de minimis rules- the aid may not exceed EUR 200,000 per undertaking. SIH expects the final product, consisting of preferential interest rates for SMEs, to be at the level of 0 – 2%.
 
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.
 
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 bonuses
  • 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: In the first step, the standard interest rate will be reduced by reducing the bank's margin by 50%, based on the guarantee provided. Consequently, the interest rate may be additionally reduced by an interest subsidy of max. 4% p. a., but only up to a final interest rate of 0%. The bank may not apply less than a 4% interest rate subsidy if the final interest rate is above 0%. The interest rate subsidy may be granted only after 12 months since the date of the beginning of first drawdown of the loan (i.e. when the deferral of principal and interest has expired), and is granted retrospectively to the date of granting the loan – i.e. it also applies to interest due to the deferral period.
  • Fees for provision / increase / guarantee / early repayment: 0%.
  • Conditions for granting the interest bonus:
    • 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 SMEs 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.
 
More information on the call, together with the specific terms and annexes, can be found on the SIH website.