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    New Financing – government measures to provide credit support

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  • 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.

    Update 12 May

    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-scheme)

    The GO-scheme (Garantie Ondernemingsfinanciering) has been established in 2009 to anticipate on the negative consequences of the credit crisis. The GO-scheme is designed for large and medium sized enterprises facing difficulties with obtaining financing. Under the current 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 this enables enterprises 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.

    The GO-scheme is designed for large and medium sized enterprises with substantial business activities in the Netherlands and for enterprises in the Caribbean. Under the current GO-scheme, banks can get a 50% state guarantee on bank loans and guarantee facilities from EUR 1.5 million up to EUR 150 million per company. This maximum amount used to be EUR 50 million, but as part of the measures taken in response to the COVID-19 outbreak the Dutch government has temporarily increased this maximum amount to EUR 150 million as per 27 March 2020. On 7 April 2020 the government has added a temporary corona-module (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). In addition, as per 7 April 2020 the government has further increased its budget to EUR 10 billion (this was already increased on 17 March 2020 from EUR 400 million to EUR 1.5 billion). 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 2020.

    The GO-scheme is designed for large and medium sized enterprises with substantial business activities in the Netherlands and for enterprises in the Caribbean. Under the current GO-scheme, banks can get a 50% state guarantee on bank loans and guarantee facilities from EUR 1.5 million up to EUR 150 million per company. This maximum amount used to be EUR 50 million, but as part of the measures taken in response to the COVID-19 outbreak the Dutch government has temporarily increased this maximum amount to EUR 150 million as per 27 March 2020. As the loans will be guaranteed for 50%, the maximum guarantee amount under the extended GO-scheme amounts to EUR 75 million. In addition, the government has increased its budget from EUR 400 million to EUR 1.5 billion.

    Eligibility criteria
    General criteria for enterprises to qualify:

    • Dutch enterprises with substantial commercial activities in the Netherlands
    • fundamentally healthy companies
    • reasonable profitability and continuity prospects
    • the financing qualifies as 'Fresh Money' – in short, it should involve an expansion of the bank's exposure and it also involved certain refinancings
    • no excessive capital withdrawals have taken place in the last 12 months
    • GO-support only for financing of own business activities

    The following industries are excluded from the GO-scheme:

    • agriculture, fisheries and aquaculture except for supplies and services real estate for speculative purposes
    • 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.

    Characteristics of GO-financing
    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.
    • 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 is 8 quarters.
    • The maximum amount that may be guaranteed by the government 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, repayment and commission owed to the lender, the government imposes a commission of 2% (this used to be 3.9%).

    • per company, the total amount of bank loans and bank guarantees falling under the GO-financing is not more than EUR 150,000 (the government guarantee amounts to a maximum of EUR 135 million large companies and EUR 120 million for small and medium-sized enterprises)

    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, institutions can participate in the GO-scheme that

    (i)            are qualified to practice the business of a credit institution in Bonaire, Sint Eustatius or Saba based on the Banking Industry and Credit System (Supervision) (BES Islands) Act 1994 (Wet Toezicht Bank- en Kredietwezen 1994 BES); 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 partipate must compete an admission procedure and can contact the Netherlands Enterprise Agency (Rijksdienst voor Ondernemend Nederland: RVO). Financiers that already participate in the 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 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 have been met. Subsequently, the financier decides whether it will submit the application with the Netherlands Enterprise Agency (Rijksdienst voor Ondernemend Nederland, RVO.nl). Financiers can submit their application until 31 May 2020, 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, but it is not certain whether this is also the case during the corona-crisis. 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 only), 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. With this 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. Applications for the extended SME Credit Guarantee Scheme can be submitted until 31 March 2021.

    The extended SME Credit Guarantee Scheme entered into effect on 16 March 2020. The government has not (yet) published any specific criteria for admission to the extended SME Credit Guarantee Scheme. This article will be updated as soon as more information has become available.   

    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 (start-ups may be eligible for extra opportunities)  (in Dutch);  
    • 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.
    • 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 is 8 quarters.
    • In 2020, the maximum amount that may be guaranteed by the government is EUR 640 million for banks and EUR 25 million for non-bank lenders.
    • The extended SME Credit Guarantee Scheme will be effective until 30 June 2022.
    • In addition to interest, repayment and commission owed to the lender, the government imposes a commission of 2% (this commission was initially 3.9%).

    Application
    The application process is described below:

    1. 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).  
    2. The lender decides on the application and determines whether the extended SME Credit Guarantee Scheme may be used.
    3. The conditions of the financing are discussed, considering the conditions of the SME Credit Guarantee Scheme.
    4. If the lender approves the application, the lender will apply for the SME Credit Guarantee Scheme with the government.
    5. 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 indicated that an accelerated accreditation is available for non-banking lenders. 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 of maximum EUR 1.2 million or EUR 2.5 million, depending on the type of business. 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.

    If participating banks provide a bridge loan under the BL-C, this loan must be repaid within 8 quarters. The loan may be repaid by equal amounts or in a lump sum at the end of the term. The commission for a start-up is 1% and for other agricultural of horticultural enterprises the commission amounts 3%. 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:

    1. The enterprise applies for a loan with a lender participating in the BL-C (ABN AMRO Bank, ING Bank, Rabobank, Triodos Bank and NIBC).
    2. The lender decides on the application and determines whether the BL-C may be used.
    3. The conditions of the financing are discussed, considering the conditions of the BL-C.
    4. If the lender approves the application, the lender will apply for the BL-C with the government.
    5. 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 (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

    Alternative measures

    Agricultural entrepreneurs who are not eligible for the BL-C may be eligible for the SME Credit Guarantee Scheme. See above.

    Other: adjustments to advances on CAP subsidies
    The European Commission has proposed adjustments for the payment of advances on subsidies under the Common Agricultural Policy (CAP). The proposed adjustments are an increase from 50% to 70% of the standard percentages for advance payments of CAP direct income support and an increase from 75% to 85% of the standard percentages for Agri-Environmental Management Subsidy. In addition, advance payments may be made without all physical checks having been carried out. However, administrative checks must be completed. The earliest possible date for the payment of advances remains 16 October 2020.

    As many agricultural entrepreneurs now have, or will soon have, liquidity problems, it is important that payments can be made as soon as possible. The government therefore wants to be able to make payments at an earlier date than 16 October 2020, i.e. as from 1 July 2020. The government would also like to have the percentage for advance payments of direct income support increased to 80%.

    Furthermore, the government is also working on a national measure to ensure that agricultural entrepreneurs have access to CAP direct income support in July 2020.

    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. By providing these guarantees, the Dutch government enables financiers to provide an additional EUR 750 million in bridging loans for these enterprises. The scheme has yet to be approved by the European Commission under the Temporary European Framework Covid-19. The Dutch Government intends to have the scheme available from mid-May 2020.

    How does the KKC scheme work?
    For the bridging loans granted under the KKC scheme, the Dutch government is a 95% guarantor. This means that EUR 750 million of bridging loans for small enterprises with a relatively small financing need (from EUR 10,000 to EUR 50,000) will become available.

    It is estimated that several tens of thousands of enterprises in the Netherlands will be eligible for the KKC scheme. The reason that this scheme is being set up is that for these types of small enterprises it is currently difficult to get access to financial support, while they are often severely affected. 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.

    Requirements (as far as already elaborated) to be able to make use of the KKC scheme

    • The KCC scheme is open to enterprises with a turnover of EUR 50,000 or more which were sufficiently profitable before the corona crisis and which were registered in the Chamber of Commerce before 1 January 2019.
    • Under the KKC scheme, enterprises may apply for a loan in the minimum amount of EUR 10,000 up to a maximum of EUR 50,000.
    • The term is a maximum of 5 years and the interest amounts to a maximum of 4%. In addition, enterprises must pay to the government a one-off commission of 2% as compensation.
    • The Dutch government will act as guarantor for 95%.

    Where can entrepreneurs apply for the KKC scheme?
    Rabobank, ABN AMRO, ING, Volksbank and Triodos have agreed to offer loans via the KKC scheme. Other financiers that are accredited BMKB-C financiers may also offer loans via this scheme.

    From when can entrepreneurs apply?
    The European Commission has yet to approve this scheme. The actual entry into force and the specification of the scheme are dependent on this. After approval by the European Commission, enterprises may file an application with one of the participating banks. The banks have indicated that - subject to European approval - they will be ready to receive applications from enterprises in mid-May 2020.

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

     

    More about

    Jelmer Baukema

    Lawyer

    Jelmer is a lawyer in the Finance & Restructuring practice at Van Doorne. Jelmer focusses his practice on advising financial institutions and other domestic and international clients on financing and (debt) restructuring transactions. In addition, he advises clients on legal aspects connected to alternative financing and funding methods such as peer-to-peer (P2P) lending, crowdfunding, debt-based securities and invoice financing.

    Joost Volkers

    Lawyer

    Joost is specialised in insolvency law, commercial contracts, liability issues, litigation and international private law. He also has broad experience in the finance practice. He focuses on advising on and litigating with respect to loan and security documents, insolvency law and various commercial contracts. He also drafts and reviews commercial contracts for national and international clients. In addition, Joost advises on liability issues and any international private law aspects thereof.

    Sjoerd Kamerbeek

    Partner, Lawyer

    As corporate law specialist, Sjoerd advises clients on stakeholder management and counsels companies on commercial and corporate disputes and litigation. In addition, he assists with strategic mergers and acquisitions in connection with takeover and shareholder disputes.

    Stefan van Rossum

    Partner, Lawyer

    Stefan is a financing transactions specialist with lots of experience. He heads Van Doorne’s Restructuring and Insolvency team, and provides advice to banks and investors (including several of the world’s largest hedge funds) on Dutch and international restructuring. Moreover, he has developed outstanding skills relating to acquisitions and other corporate and project financing transactions.