On 19 March the European Commission has adopted a „The State aid Temporary Framework to support the economy in the context of the COVID-19 outbreak“. It enables Member States to ensure that sufficient liquidity remains available to businesses of all types and the continuity of economic activity during and after the virus outbreak to be preserved.
At a glance
- Grants up to €800,000 to a company;
- State guarantees for loans;
- Subsidised public loans to the companies;
- Short-term export credit insurances by the State.
Five types of aid are provided:
- Direct grants, selective tax advantages and advance payments: Member States will be able to set up schemes to grant up to €800,000 to a company to address its urgent liquidity needs.
- State guarantees for loans taken by companies from banks – the aim is the banks to keep providing loans to the customers who need them.
- Subsidised public loans with favourable interest rates to the companies – the aim is to help the businesses cover immediate working capital and its investment needs.
- Safeguards for banks that channel State aid to the real economy – Some Member States plan to build on banks’ existing lending capacities, and use them as a channel for support to businesses (in particular to SMEs). Such aid is considered as direct aid to the banks’ customers, not to the banks themselves, and gives guidance on how to ensure minimal distortion of competition between banks.
- Enabling short-term export credit insurance to be provided by the State where needed – it is introduced additional flexibility on how to demonstrate that certain countries are not-marketable risks.
The Framework will be in place until the end of December 2020, with the possibility to be extended, if needed.