BUSINESS

Firms reject loans to keep dismissals option

PROKOPIS HATZINIKOLAOU

TAGS: Finance, Economy

The requirement that they keep on all their employees until at least October 31 led many enterprises to reject the option of a state loan, even though the interest rate of less than 1% was very attractive. According to a senior Finance Ministry official, thousands of enterprises did not want to commit themselves to this term of the “Deposit To Be Returned,” resulting in their rejection by the system.

Ministry data show that out of the 72,000 enterprises eligible for state loans totaling €840 million, only 48,500 companies confirmed their participation in the process; this means just over two-thirds of businesses have accepted all the conditions set and will gradually receive the cash agreed.

That development is of great concern for the government, as it realizes many enterprises intend to carry out redundancies, or at least are afraid they may not be able to hold on to all their staff due to the pandemic and the economic problems it has created.

The Finance Ministry is offering companies that have not yet confirmed their application for the loans a few more days to decide: It has extended the deadline for applications for the loans that would have expired on Friday until Tuesday, May 19.

In case the planned sum of €1 billion is not all used up, the remainder from this first stage will be added to the second round of the Deposit To Be Returned, which will therefore exceed €1 billion.

On Friday €177.8 million was paid out to 25,046 enterprises, after €55.5 million was paid out in previous days, taking the total amount of disbursements to €233.3 million euros for 34,058 businesses.

The second stage of the five-year loan issues may also include enterprises included in the first phase, giving them additional cash, provided the data in April – and most likely May too – reveal a great financial loss that requires a state intervention. The ministry will effectively create a special register of individual companies hurt by the crisis based on the two months’ data. This will also incorporate businesses that may have been excluded from all other financing instruments (guarantee fund etc) and it is particularly likely that the criteria for the issue of the state loan will be amended; yet all this will only be decided after the expiry of the ongoing procedure.

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