COVID-19 mitigation Financial instrument
Bratislava, March 23, 2020 - The Slovak Investment Holding (SIH) is launching a new programme of financial assistance for small and medium-sized enterprises (SMEs) designed to help carry them over the period of difficulties caused by the necessary health and safety measures to contain the spread of coronavirus.
The programme consists of guarantees for banks which will enable the extension of favourable-terms bridging loans to SMEs, topped up by an interest rate subsidy for those enterprises which manage to keep their staffing levels unchanged. The principal objective is to help SMEs overcome financial difficulties caused by the ongoing situation and to preserve jobs in spite of the current crisis.
The SIH is currently designing a guarantee financial instrument combined with an interest subsidy, to become available in early April. All financial institutions with a valid banking licence and an authorisation to provide loans in the Slovak Republic over the instrument’s implementation period shall be eligible to apply for the funds available (provisionally €38 million). By means of said quarantee financial instrument, the SIH will shoulder part of the banks’ credit risk ensuing from new loans extended to the SMEs negatively affected by the current situation. By providing SMEs with an interest subsidy of up to 4%, the SIH should simultaneously help reduce interest rates for those enterprises that will be able to preserve employment levels thanks to the loans.
The financial programme proposed should facilitate the provision of new bridging loans of a maximum four-year maturity (including a one-year grace period) up to the amount of approximately €1.2 million per loan. The beneficiary businesses will be able to use the loaned funds to cover both their investment and operating costs in order to preserve employment. The programme is fully funded from the European Structural and Investment Funds, namely from the Operational Programme Integrated Infrastructure, as well as from the government budget of the Slovak Republic.
The SIH is expecting that the upcoming instrument will be of interest to eligible banks, and proposes that they use it to offer the most favourable loan terms possible to their clients. The banks shall be able to apply for the use of the instrument to the Slovak Investment Holding in line with instructions to be announced on March 30, 2020. First loans to Slovak enterprises could be extended as early as April 2020.
As of today, March 23, 2020, the SIH is launching consultations with financial institutions holding a valid banking licence and an authorisation to provide loans in the Slovak Republic; the consultations will be concluded at midnight, March 25, 2020. The purpose of the consultations is to receive feedback from relevant market players regarding the upcoming financial instrument and thus to ensure its effective design and performance. Having taken this feedback into consideration, the SIH intends to launch the call for the expression of interest in the implementation of this financial instrument on March 30, 2020. Should your institution be interested in taking part in the consultations, please contact peter.dittrich@sih.sk.