Banks: We will not approve loans to all sustainable

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On May 15, the bill on the granting of € 1.5 billion in government guarantees to businesses and self-employed workers in order to grant new loans on favorable terms to deal with its repercussions is expected to be put before the Plenary Session of the House of Representatives.


Following the adoption of the bill by the House of Representatives, a publication will have to be published in the Official Gazette of the Republic on 22 May so that the submission of applications can begin on Monday 25 May. The examination of the applications will be done electronically, while as in the case with the Home Plan, a memorandum of cooperation will be signed between the government and the participating banks. 

The processes have begun

Bank sources who spoke to InBusinessNews said that the bank staffs have already started procedures in order to have a quick analysis and approval or rejection of the applications that will be submitted. “We expect a wave of new applications and the goal is not to have long delays, so that we, in turn, can support sustainable borrowers, whether they are self-employed or small, medium and large businesses,” they said.
The same sources said that the approval of a loan, in a business, or an employee who was viable in 2019 should not be taken for granted, ie having all his tax obligations regulated and he had no delays of more than 30 days in repaying his installments.

 Each banking institution will assess the risk

“It is up to each banking institution to assess the risk and reduce the risk of erosion of its capital to the lowest possible degree. For example, a bank may not want to support an economic sector if it considers that it has suffered an irreparable blow, “they said, adding that borrowers who are rejected by one bank may receive approval from another.

 The importance of government guarantees
The same sources, referring to the importance of granting loans with government guarantees, told us that they were not given to serve the unsustainable, but to enable banks to lend. “Guarantees, in essence, make it possible to provide loans for purely accounting reasons to banks,” they said.
At the same time, they are asking for clarifications on the issue of providing new loans in the event that there are no checked financial accounts for 2019.

 Loan management with collateralRegarding what will be born with the collateral that will be included in the loans in case it is not repaid, they underlined that these properties will be sold by the banks and the amount of their sale will be deducted as a percentage depending on the type of loan and the government’s contribution. its debts.
Examples
– If, for example, a self-employed employee is given a loan of € 20,000 with a repayment period of 6 years and the borrower repays € 10,000 then the government will be required to cover 85% of the remaining amount ie € 8,500 plus interest and the bank remaining amount.
-If it concerns a large company where the state guarantee reaches 70%, then for a loan of € 200,000 with a repayment period of 3 years, for which 100% was paid, the state will pay € 70,000 plus interest and the rest of the damage will be banks should be shouldered.
With the enactment of the bill, state guarantees will be given:
– € 300 million to independent employees and very small businesses.
– € 1 billion in small and medium enterprises
– € 200 million in large enterprises.
The loan repayment period will start at 3 months and will last up to 6 years
Government guarantees will reach 85% from the state and 15% from banks for loans to very small businesses and self-employed, and 70% from the state and 30% from banks for loans to small and medium-sized enterprises.
Conditions –
Loans will be entitled to as many companies and self-employed workers were viable until December 31, 2019 and had no delays in payment of installments beyond 30 days.
-At the same time, only those who do not make redundancies for a period of 6 months from the date of issuance of the relevant decree will have access to the new loan – Those who
have settled or regulated their tax obligations
Maximum loan amount
– Must not exceed the annual salary cost of the company or the self-employed for 2019 or the last available year
– It must not exceed 25% of the total turnover of the business or the self-employed

Source : IB

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