Only healthy and consistent enterprises will have access to the state-guaranteed working capital funded by commercial banks and the Guarantee Fund.
The Fund will operate under the umbrella of the Hellenic Development Bank and, according to the announcement of the latter’s president and chief executive officer Athina Hatzipetrou, “the working capital will be financed on favorable terms and with reduced collateral.”
The draft contract with the banks provides that “the guarantee of the Fund does not aim to strengthen the liquidity or capital adequacy of credit institutions that ought to pass on the advantage of the guarantee to the enterprises through the reduction of collateral requirements and/or reducing the cost of borrowing.”
Enterprises will be able to submit applications until May 26, following the signing of their loan contracts with banks, so that the Fund can be activated from early June.
Access to credit will be granted to all categories of enterprises, from the small and very small to the medium-sized and large, regardless of whether they belong to the Activity Code Numbers (KAD) ruled to have been affected by the pandemic according to the Finance Ministry.
The credit issued will be new loans, as according to the contract model shared with the banks the refinancing of existing loans is clearly forbidden in this case. The duration of the loans will be five years, possibly including a grace period.
The criteria for eligibility will be very strict, heeding the European Commission guidelines, so as to exclude any strategic defaulters or so-called “zombie” companies. Companies must be consistent in their payments, financially healthy and without any decisions concerning unfair state subsidy against them that have not been settled yet.
The Guarantee Fund will start off with state resources of 1 billion euros that with the participation of banks will leverage total capital of €3.5 billion. At a later stage the state funds may rise to €2 billion, leveraging funding of €7 billion in total.