Bratislava, June 3, 2020 – 41 firms and over 1,500 jobs: such are the salvage statistics of Slovenská sporiteľňa in cooperation with the Slovak Investment Holding (SIH) thanks to Anti-Corona Guarantee. And since the demand for this kind of financing on the part of Slovak private businesses is several times higher than expected (currently there are some 1,100 firms interested), Slovenská sporiteľňa and the SIH reached an agreement on the second tranche in the total volume of almost €9.2 million, thereby matching the first tranche.
Slovenská sporiteľňa was the first Slovak bank to sign an agreement with the SIH on providing financial assistance to small and medium-sized enterprises (SMEs) while one of its clients – namely Jutex Slovakia – became the first firm in early May to obtain funds (€600,000) guaranteed by this scheme. Today, Slovenská sporiteľňa became the first Slovak bank to reach an agreement with the SIH on the continuation of this financial instrument.
Overall, almost 1,100 businesses applied for Slovenská sporiteľňa loans secured by the Anti-Corona Guarantee in the total amount of over €114 million. 850 of them were small firms and tradespeople whose annual turnover does not exceed one million euro; the average amount of loan was €50,000. “We are extremely sorry we have not been able to satisfy all firms’ requests for financing more promptly; however, the expressed interest proves there is something to this guarantee scheme. So far, we have helped rescue more than 1,500 employees in 41 firms. I can already tell you that we will use the second tranche to the fullest and that we have already drafted an application for the third tranche. At the same time, we are still negotiating another scheme in the overall amount of €500 million a month for the entire banking sector and I believe we will soon reach an agreement so that we can help other firms affected by the crisis,” said Norbert Hovančák, Slovenská sporiteľňa Executive Board member responsible for corporate banking and financial markets.
Overall, financial assistance under the scheme went to 41 firms from all regions of Slovakia, with the Banská Bystrica region leading the way with 12 firms. Also, Slovenská sporiteľňa extended the maximum possible loan in the amount of €1.18 million. “In terms of administration, the programme is not exactly the simplest, which is why we, in concurrence with other banks, have submitted several comments and suggestions aimed at improving it. Nevertheless, our cooperation with the SIH is smooth; they communicate with us on a regular basis and they strive to seek solutions,” added Hovančák.
“The interest on the part of clients of Slovenská sporiteľňa and other banks shows that the SIH Anti-Corona Guarantee has been set in line with market needs, and we believe it will help small and medium businesses to cope with negative effects of the crisis. The Ministry of Economy has been very prompt to react, providing sufficient additional funds designed to support businesses and thus facilitating further tranches. The funds used to cover the SIH Anti-Corona Guarantee come from the European structural and investment funds (ESIF) and the conditions are therefore based on the European legislation. Following our signing of contracts with commercial banks, the European Commission simplified the rules of its use in the time of the crisis, so last week we were able to get participating banks acquainted with our proposal to simplify their performance within this scheme,” explained Peter Dittrich, SIH Executive Board Vice-Chairman and Investments Director.
What is the SIH Anti-Corona Guarantee about?
Based on the guarantee, commercial banks create and administer a portfolio of new loans that are covered by guarantees from the NDF II fund. The guaranteed product covers the credit risk on the level of individual loans as well as on that of the entire portfolio, which allows for extending loans to for SMEs under more favourable terms. In other words, government does not provide the funds directly but helps multiple firms through this portfolio guarantee – this is known as the so-called leverage effect.
Through the interest subsidy, the scheme helps reduce interest rates SMEs have to repay to the bank.
The conditions for providing the interest subsidy are as follows:
- During the period of 12 months from the first day of drawing the loan, each beneficiary SME must maintain the average employment of its regular workforce from the prior period;
- Should a beneficiary SME have any overdue liabilities on social or health insurance contributions for longer than one month at the time of approving the loan, the SME shall be able to settle such outstanding liabilities from the provided loan. This is not to say the SME is allowed to use the extended loan to settle these liabilities.