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New Financing – government measures to provide credit support

1 May 2020

Update 12 May

The Dutch government has extended the existing guarantee schemes to provide credit support. In this article, we provide a description of the relevant schemes and how these have been extended in connection with the COVID-19 outbreak.

Enterprises that are not eligible for the schemes discussed below may use any other government measure of to address liquidity issues, such as the Concession Measure on Preservation of Employment (Noodmaatregel Overbrugging voor Werkbehoud or NOW) and tax measures. Please see our Corona-hub for more information on liquidity issues, financing and restructuring.

Corporate Finance Guarantee (GO- and GO-C scheme)

The GO-scheme (Garantie Ondernemingsfinanciering) has been established in 2009 to anticipate on the negative consequences of the credit crisis. Under the GO-scheme, banks receive a 50% state guarantee on bank loans and guarantee facilities from EUR 1.5 million up to EUR 150 million per company. With the state guarantee, banks reduce their risk and as a result they are (more) willing to provide financing. Enterprises therefore have the opportunity to obtain financing that they would not receive without such guarantee. Since 2009, an amount of more than EUR 3.5 billion of GO-loans and bank guarantee facilities have been provided. The government thus has provided an amount of more than EUR 1.75 billion of guarantees.

On 7 April 2020 the government has added a temporary corona-module: the GO-C. The maximum guarantee rate under the GO-C has been increased from 50% to 80% for large companies (with annual revenues of EUR 50 million or more) and 90% for small and medium-sized enterprises (with annual revenues of up to EUR 50 million). The percentage of state guarantee depends on the turnover of the company. Loans of up to EUR 150 million are guaranteed up to a maximum of EUR 135 million. For 2021, a budget of EUR 2.5 billion (for GO and GO-C together) is available.

The GO-C is applicable to loans granted as from 24 March 2020. Guarantee applications under the GO-C can be submitted until 15 December 2021.

Requirements for using the GO-scheme and GO-C scheme:
The GO-scheme is intended for enterprises

with substantial commercial activities in the Netherlands, Bonaire, St. Eustatius or Saba.
that are fundamentally healthy.
that have reasonable profitability and continuity prospects.
that attract ‘Fresh Money’ – in short, it should involve an expansion of the bank’s exposure and it also involved certain refinancings.
where no excessive capital withdrawals have taken place in the last 12 months.
that apply for GO-support only to finance their own business activities.

In order to be eligible for the GO-C scheme, it is also required that the liquidity need of the company concerned arose as a result of the corona crisis and that the company was not already in financial difficulties on 31 December 2019.

The following industries are excluded from the GO-scheme:

agriculture, fisheries and aquaculture except for supplies and services real estate for speculative purposes.
real estate except for broking activities and project financing.
the financial sector except for intermediation.
healthcare, as far as the company is a healthcare provider providing services as described in the Dutch Health Insurance Act (Zorgverzekeringswet) and the general act on special sickness costs (AWBZ).

In addition, realization of construction in project development is included under the GO-scheme. This will only be available through specialised banks with broad financing experience in the field of project development.

The following sectors are excluded from the GO-C scheme:

real estate as far as the activities are aimed at achieving of results by value increase of real estate without significant value being added by own productive activities.
the financial sector as far as the company carries out the banking, insurance or investment business, or has a participation firm.
healthcare, as far as the company is a provider as meant in article 1, section c, of the Healthcare Market Regulation Act (Wet marktordening gezondheidszorg).

Characteristics of GO-financing and GO-C financing
Characteristics of the GO-financing:

bank loans, subordinated or not, with a maximum term of 6 years; the bank is leading when it comes to establishing collateral.
both fixed-rate loans and variable-rate loans based on Euribor rates are eligible for the GO-scheme.
bank guarantee facility for the provision of bank guarantees with a minimum term of 6 months and at least EUR 250,000. The maximum maturity of the guarantees provided is 6 years after the conclusion of the bank guarantee facility.
per company, the lower limit is EUR 1.5 million for both bank loans and the bank guarantee facility under the GO financing.
per company, the total of bank loans and bank guarantees that can be provided under the GO financing is EUR 150 million.

The most important deviations of the GO-C financing from the GO-financing are:

loans and guarantees under the GO-C have a maturity of up to 6 years.
only non-subordinated loans can be brought under the GO-C guarantee.
a minimum commission applies.

Participating as financier
Credit institutions and non-life insurers as defined in article 1:1 of the of the Dutch Act on Financial Supervision (Wet op het Financieel Toezicht) can participate as financier. In addition, credit institutions within the meaning of the Banking Industry and Credit system (Supervision) (BES Islands) Act 1994 (Wet Toezicht Bank- en Kredietwezen 1994 BES) can participate in the GO-scheme. Such a credit institution may participate if:

(i) based on the above mentioned act, it is qualified to practice the business of a credit institution in Bonaire, Sint Eustatius or Saba; and

(ii) if the relevant loans have been provided to an enterprise in Bonaire, Sint Eustatius or Saba.

Banks and non-life insurers that wish to participate must complete an admission procedure and can contact the Netherlands Enterprise Agency (Rijksdienst voor Ondernemend Nederland: RVO). Financiers that already participate in the GO-scheme and GO-scheme can be found via this website (in Dutch). On this website you will also find names of the banks that participate in the GO-project development.

Application
Enterprises do not apply for the GO-scheme and GO-C scheme themselves, but need to contact a financier that participates in the GO-scheme. After the financier has approved the credit application, the financier will assess whether the conditions of the GO-scheme/GO-C scheme have been met. Subsequently, the financier decides whether it will submit the application with RVO. Financiers can submit their application for the GO scheme until 1 April 2021, 17:00h CET. Applications for the GO-C scheme can be submitted until 15 December 2021, 17:00h CET. Ultimately 3 weeks after the submission, the government will share its position with the financier. In practice, the response of RVO used to be shorter. After the decision on the guarantee the financier will determine whether the financing will actually be provided.

For further details on the GO scheme, please refer to the information published by the government (in Dutch), which includes information on commissions payable by the bank.

SME Credit Guarantee Scheme

From 16 March 2020 to 1 April 2021, the government-guaranteed scheme for loans to small and medium-sized enterprises (SME) Credit Guarantee Scheme (Borgstelling midden- en kleinbedrijf: BMKB) will be extended to support SMEs affected by the Covid-19 outbreak. This extended SME Credit Guarantee Scheme is also known as ‘BMKB-C’. With the SME Credit Guarantee Scheme the government partly guarantees loans made available to SMEs that wish to take out a loan but are unable to provide the lender with sufficient security. The government expects that an amount of EUR 300 million of additional financing could be made available to SMEs affected by the Covid-19 outbreak under this extended scheme.

How does the extended SME Credit Guarantee Scheme work?
Under the regular SME Credit Guarantee Scheme, the government guaranteed loan (borgstellingskrediet) concerns 50% of the credit amount provided by the lender. The government guarantee covers 90% of the government guaranteed loan. Under the extended SME Credit Guarantee Scheme, the government guaranteed loan has been increased from 50% to 75% and the SME Credit Guarantee Scheme may also be used for a bridge loan or an increase of the overdraft limit of a current account. The maximum term of the loan has been extended as per 28 April 2020 from 2 to 4 years. The credit may be repaid linearly or all at once at the end of the term. The scheme applies retroactively from 16 March2020 and an application can be submitted until 31 December 2021.

Eligibility Criteria

The extended SME Credit Guarantee Scheme has been made available to enterprises:

that are established in the Netherlands, Bonaire, Saba or St. Eustatius;
that have up to 250 FTE employees;
that have an annual revenue of up to EUR 50 million or has a balance sheet total of up to EUR 43 million;
that have been established for over 3 years (starters are eligible for a surety loan if they take out a starter loan with the bank);
that are in essence financially healthy but are experiencing liquidity problems due to the Covid-19 outbreak. As per 28 April 2020, a turnover test will be introduced for this instead of an extensive liquidity prognosis.

The below enterprises are not eligible for the SME Credit Guarantee Scheme:

enterprises that are active in the public insured care sector;
enterprises of which more than 50% of their last or expected annual turnover is derived from the practice of:
- agriculture, horticulture, livestock or fish farming, fishery or cultivation of livestock and fish feed;
- the banking, insurance or investment business or the financing of one or more other enterprises; or
- the acquisition, disposal, development, management or development of real estate.

Characteristics of the extended SME Credit Guarantee Scheme

The guarantee runs to 75% of the credit amount provided by the lender, of which 90% is guaranteed by the government. Previously, the government guaranteed 50% of the loan.
The maximum of the government guaranteed loan has been increased from EUR 1 million to EUR 1.5 million.
The maximum term of the loan has been increased from 8 quarters to 16 quarters. The guarantee budget of the SME Credit Guarantee Scheme has been increased from EUR 765 million to EUR 1.5 billion.
The extended SME Credit Guarantee Scheme will be effective until 30 June 2022.
In addition to interest, repayments and commission payable to the lender, the government charges a commission of 2% for a term of up to 8 quarters and 3% for a term of 9 to 16 quarters.
A personal surety of 10% is required for the SME Credit Guarantee Scheme to be provided. Previously, a personal surety of 25% was required.

Application
The application process is described below:

The enterprise applies for a loan or an increase of the overdraft limit with a lender participating in the SME Credit Guarantee Scheme. The list of participating lenders can be found via this link (in Dutch).
The lender decides on the application and determines whether the extended SME Credit Guarantee Scheme may be used.
The conditions of the financing are discussed, considering the conditions of the SME Credit Guarantee Scheme.
If the lender approves the application, the lender will apply for the SME Credit Guarantee Scheme with the government.
When the application for the SME Credit Guarantee Scheme is accepted, the government guarantees a part of the loan or the increase of the overdraft limit provided by the lender.

Participating as a lender
Both banks and non-bank lenders may participate in the SME Credit Guarantee Scheme. These parties may contact the Netherlands Enterprise Agency (Rijksdienst voor Ondernemend Nederland).

The possibility for non-banking lenders to participate is a recent development and the Netherlands Enterprise Agency accredited a number of non-banking lenders to provide loans under the extended SME Credit Guarantee Scheme. By doing so, the Netherlands Enterprise Agency makes it more attractive for non-bank lenders to (continue) financing of SMEs.

More information can be found via this link (in Dutch).

Credit Guarantee Scheme for Agriculture

From 18 March 2020 to 1 April 2021, the Credit Guarantee Scheme for Agriculture (BL) will be extended with an additional module: the Credit Guarantee Scheme for Agriculture (BL-C) (Borgstelling MKB-Landbouwkredieten). Healthy agricultural or horticultural enterprises that have experienced liquidity problems as a result of the outbreak of Covid-19 may use the BL-C for a bridge loan. With the BL-C scheme, an agricultural or horticultural company can receive a loan of up to EUR 1.5 million. Agriculture and horticultural businesses that have already (to a large extent) made use of the maximum financing capacity under the regular BL, may apply for an increase of the current government guaranteed loan up to a maximum amount of EUR 300,000.

How does the BL-C work?
When an agriculture or horticulture enterprise is eligible for the BL-C, the government guarantees 70% of the bridge loan that the enterprise borrows from one of the participating lenders (in Dutch) (ABN AMRO Bank, Deutsche Bank, ING Bank, Rabobank, Triodos Bank and NIBC). This guarantee enables the enterprise to take out a loan if it is unable to provide sufficient security itself. The personal guarantee for a majority shareholder within a private company has been reduced from 25% to 10% of the BL-C credit.

If lenders provide a loan under the BL-C, repayment of the loan must commence at least 2 years after the start of the loan and must be repaid within 4 years. Repayments can be made per month, quarter or at the end of the term, this is done in consultation with the financier. For the loan, the borrower pays a commission of:

0.5% for a starter or acquirer (active for less than 3 years) in case of a term of up to 2 years;
1.5% for other companies in case of a term longer than 2 years;
0.75% for a starter or acquirer (active for less than 3 years) in case of a term of up to 2 years;
2.25% for other companies in case a term longer than 2 years.

Applications for the BL-C can be submitted until 31 March 2021.

Eligibility Criteria
In order to be eligible for the BL-C, the agricultural or horticultural enterprise needs to comply with the following requirements:

The enterprise is an agricultural enterprise (for example in agriculture, livestock or horticulture).
The turnover is mainly from plant product or livestock (primary production).
The enterprise is located in the Netherlands and the business activities mainly take place in the Netherlands.
The company is in essence financially healthy but is experiencing liquidity problems due to the Covid-19 outbreak.

Application
If an agricultural or horticultural enterprise expects to comply with the requirements as set out above, it may apply for the BL-C. The application process is described below:

The enterprise applies for a loan with a lender participating in the BL-C (ABN AMRO Bank, ING Bank, Rabobank, Triodos Bank and NIBC).
The lender decides on the application and determines whether the BL-C may be used.
The conditions of the financing are discussed, considering the conditions of the BL-C.
If the lender approves the application, the lender will apply for the BL-C with the government.
When the application for the BL-C is accepted, the government guarantees a part of the loan provided by the lender.

More information about the BL and BL-C can be found via this link (in Dutch).

Participating as a lender
Both banks and non-bank lenders may participate in the BL-C. These parties may contact the Netherlands Enterprise Agency (Rijksdienst voor Ondernemend Nederland) via rvo.nl

Small Loans Corona Guarantee scheme (KKC scheme)

The KKC scheme (Klein Krediet Corona Garantieregeling) is intended for micro, small and medium-sized enterprises with a relatively small financing need between EUR 10,000 and EUR 50,000. The KKC scheme came into force on 29 May 2020. Applications can be submitted until 31 December 2021.

It is estimated that several tens of thousands of enterprises in the Netherlands are eligible for the KKC scheme. Financiers incur relatively high costs when assessing small loans, and the risk for financiers that a loan will not be repaid is relatively high due to the corona crisis. As a result, small enterprises usually have difficulty obtaining financing, whilst this type of business is of great importance to the community and is often severely affected by the current corona crisis.

How does the KKC scheme work?
The KKC scheme allows small, in essence financially healthy, enterprises to take out loans between EUR 10,000 and EUR 50,000 with financiers. Due to the KKC scheme, these small loans can be taken out faster and on relatively favorable terms. For the bridging loans provided under the KKC scheme, the Dutch government guarantees 95%. The remaining 5% is at the risk of the financier. Enterprises can make use of the KKC scheme multiple times, as long as the maximum limit of EUR 50,000 has not been reached. The total budget for bridging loans is EUR 250 million.

Requirements to be able to make use of the KKC scheme
In order to be eligible for the KKC scheme, a company must, among other things:

be located in the Netherlands and have its business activities mainly take place in the Netherlands.
be registered with the Chamber of Commerce (Kamer van Koophandel) before 1 January 2019.
have a minimal annual turnover of EUR 50,000.
have been sufficiently profitable before the corona crisis started.
be able to meet its repayment obligations.
in the case of a legal entity: take out a private guarantee for 10% of the principal amount.

The guarantee relates exclusively to credit agreements

in the form of a loan or an overdraft facility, not being a subordinated loan.
with a maturity of 5 years, with the option of suspension for a maximum period of 8 quarters.
where the amount of credit granted is a minimum of EUR 10,000 and a maximum of 50,000.
where the interest rate amounts to a maximum of 4% of the credit amount.

In addition, an one-time commission fee of 2% applies, which the enterprise has to pay to the Dutch government.

The following sectors are excluded from the KKC scheme:

healthcare providers as meant in article 1, part c, of the Healthcare Market Regulation Act (Wet marktordening gezondheidszorg).
fisheries and aquaculture.
primary production of agricultural products.
processing and selling of agricultural products.

Furthermore, entrepreneurs are excluded who maintain a company of which the activities are predominantly related to real estate and the financial sector.

Where can entrepreneurs apply for the KKC scheme?
Rabobank, ABN AMRO Bank, ING Bank, Kredietunie Groningen, Volksbank and Triodos Bank have agreed to offer loans via the KKC scheme. Other financiers that are accredited BMKB-C financiers may also offer loans via this scheme. Other financiers have to be accredited as a financier for the KKC scheme at RVO (Rijksdienst Voor Ondernemend Nederland).

Until when can entrepreneurs apply?
Enterprises can submit a KKC application to their lender until 31 December 2021. In addition, loans issued after or on 7 May 2020, which meet the conditions of the KKC scheme, can be refinanced under the same terms of the KKC scheme. The scheme has been approved by the European Commission.

More information can be found on this website (in Dutch).