Faced with the prospect of thousands of small and medium-sized enterprises sinking under the weight of liabilities as a result of the pandemic’s adverse financial impact, the government is seeking ways to stem the tide which is threatening to become its worst nightmare.
The latest measure it is deploying to this end is subsidizing the loan installments of businesses after the current moratorium on payments ends.
More specifically, the initiative will aim for a smooth transition of the companies that have been under-operating for more then 10 months and have entered into a payment moratorium. This will be done with the state undertaking to pay part of their loan installments, in a scheme modeled on the Bridge (Gefyra) program, through which it subsidizes corporate and mortgage loans with the primary residence as collateral.
The measure is expected to be submitted by the Finance Ministry to the institutions for approval next week, before an agreement is reached on the criteria according to which these loan installments will be subsidized.
As of last March, a total of 2 billion euros in liabilities to tax authorities and insurance funds have been essentially frozen. The same is the case with installments for loans totaling 30 billion euros, half of which are business debts.
The mounting concern is that this huge volume of accumulated debts will create huge liabilities which, according to all estimates, will be impossible to cover by the turnover generated when Greece enters the post-lockdown era.
Bearing this in mind, banks have designed programs for a gradual return to loan installment levels paid by companies before the onset of pandemic. The loan moratoriums, with the exception of the tourism sector, have a strict expiration date in March this year.
For the transition phase, until the recovery of the economy, the companies will be asked to pay the banks part of the initial installment, which depending on the sector will start from 25% or 30% and will gradually escalate to 50%, 60%, 70%, 90% before it reaches 100%.
Each company’s inclusion in a specific program will depend on the category to which it belongs and the drop in turnover it has incurred.
The Bridge program that is being drafted will help companies pay these installments to banks as their turnover gradually starts rising again.