Measures to support the Slovenian economy in response to the coronavirus
Authors: Špela Remec, Maruša Polak
Due to constant developments, this post is being regularly updated.
Due to the outbreak of the COVID-19 epidemic, Slovenia has introduced certain measures to support companies operating in Slovenia. The Parliament has adopted several emergency laws, which also include support measures for companies. In addition, the Slovenian Export and Development Bank (“SID Banka”) and the Slovene Enterprise Fund (“SPS”) also adopted measures to provide support to the companies.
Since 13 March 2020, when the COVID-19 epidemic was declared in Slovenia, the Parliament has adopted several emergency laws in order to mitigate the effects and consequences of the epidemic. Many of the measures are aimed at supporting the economy and have been summarized in our separate COVID-19 posts.
Slovenian Export and Development Bank (SID Banka)
Together with the Ministry of Economic Development and Technology (“MGRT”), SID Banka will offer financial products to small and medium enterprises (“SMEs”) and large companies in the total amount of EUR 800 million, of which there will be new products in the amount of EUR 200 million, while EUR 600 million will come from the already existing products. Financial products are already available on the market since April 2020. The funds are intended to address liquidity problems, including liquidity in the supply of services and products, problems due to fall in demand, production fall-out, supply chain difficulties and investment difficulties. Measures also include insurance and bank loan refinancing.
Direct corporate financing during the outbreak of COVID-19 (SDMKV)
Within the framework of direct corporate financing, direct lending is available from SID Bank for companies in which an extraordinary loss of income has occurred due to the COVID-19 epidemic. Loans are available to both large companies and SMEs to provide liquidity and procurement of products and services related to the implementation of measures due to the spread of COVID-19.
Under the direct financing program to facilitate business during the epidemic, companies can receive loans ranging from EUR 100,000 to EUR 7 million for SMEs, or up to EUR 12 million for large companies. The interest rate is favourable and is generally lower than the market rate (de minimis status). Loans have a maturity of 2 to 12 years. In order to obtain a loan, a company must meet certain conditions regarding activities, operations and employment.
Financing of SMEs (MSP 9)
SID Banka has announced a new direct financing program under the existing credit fund, intended for companies facing the liquidity consequences of the outbreak of COVID-19 epidemic and those producing products or providing services which contribute to the treatment and prevention of the spread of the infectious disease COVID-19 in the provision of public health services.
The funds in the amount of EUR 100,000 to EUR 7 million are intended for sole proprietors, SMEs and cooperatives to cover the costs of purchasing fixed assets, materials, services, as well as to cover labour costs and costs related to the entrepreneur’s work. Under the program, a loan can be obtained under favourable conditions, however, it is conditioned by certain requirements regarding the borrower’s operations and the purpose of use of the loan.
Adjusted indirect financing programs
Some commercial banks and savings banks (Abanka, Addiko Bank, Gorenjska banka, Hranilnica Lon, NKBM and Sberbank) have joined the adjusted indirect financing programs, according to which the minimum and maximum loan values are not limited and which enable obtaining a loan on favourable terms.
There are four indirect funding programs available:
- the Financing for the Development of a Competitive Economy and Internationalization program, which is intended for the growth and development of SMEs or the internationalization of the operations of companies of all sizes;
- the Financing of Regional and Social Development program, which is intended to finance projects related to telecommunications, transport/traffic, sports, cultural, health, tourism and other infrastructure or housing in specific areas (non-profit housing, housing for young people, homes for the elderly and care housing);
- the Financing for the Development of the Knowledge Based Society and Innovative Entrepreneurship program, which aims to finance projects related to (i) research, development, innovation and new technologies, (ii) education, (iii) educational infrastructure or (iv) employment of persons with specialized qualifications and knowledge; and
- the Financing the Development of an Environmentally Friendly Society and Production program, which is intended to finance projects related to (i) environmental protection (especially water protection, drinking water supply, waste management, reduction of air pollution, etc.), (ii) renewable energy sources, (iii) energy efficiency; or (iv) environmentally friendly production and products.
Financing of investments and working capital for sustainable growth of tourism (TURIZEM 1)
SID Banka also changed the conditions for the sustainable tourism credit fund. The purpose of the loan is extended and also includes working capital or investments for construction, renovation or purchase and renovation of tourist facilities.
Within the framework of the program SID Banka offers loans in the amount of EUR 100,000 to EUR 20 million per project, for investments in the construction, renovation or purchase and renovation of tourist facilities and working capital loans in the amount of EUR 100,000 to EUR 7 million per borrower in the case of SMEs or up to EUR 20 million for large sole proprietors, large companies or cooperatives. A loan granted on favourable terms can be obtained by companies which meet certain conditions in terms of business, activities and employment.
Financing of health care institutions and establishments
SID Banka provides funding for health care institutions and establishments for purchases of protective equipment, supplies or service contracts due to the COVID-19 epidemic, as well as guarantees for the supply of protective materials and equipment.
Additional credit insurance offer to mitigate the effects of the COVID-19 epidemic
Bank guarantee insurance provides companies with access to bank guarantees, which are necessary for undisturbed conduct of export activities. In addition to securing service guarantees, the extended program also offers the possibility of securing payment guarantees. If the insured is an exporter, it enjoys insurance coverage for the risk of justified redemption of the guarantee due to the occurrence of non-commercial risks. If the insured is a bank, it enjoys insurance coverage for the risk of realization of the guarantee for any reason.
It is also possible to take out credit insurance for the prepayments made for the supply of respirators, masks and other protective equipment.
With all insurance instruments available at SID Banka, there is now a possibility of a higher, 95% insurance coverage for exporters for operating receivables and a reduced, 20% required Slovenian component (some insurances do not include this requirement at all).
Moratorium of bank loans for existing clients
Companies that are existing clients of SID Banka and their operations are already in difficulty and they perceive a deterioration in their financial position, may request a deferral of loan payment.
Slovene Enterprise Fund (SPS)
SPS, in cooperation with MGRT, offers a package of measures for micro companies and SMEs:
Liquidity loan (P7C)
Tender for liquidity loans in the amount of EUR 40,000 to EUR 125,000. Loans are intended to address the liquidity problems of micro companies, SMEs and cooperatives, with priority given to hotel, catering, tourism, supply chain for the automotive industry, transport services and other manufacturing activities.
Guarantees for bank loans with interest rate subsidy (P1 plus 2020)
SPS has adjusted the evaluation conditions for applications to the tender P1 plus 2020 – Guarantees for bank loans with subsidized interest rate. Thus, the guarantee scheme is also intended to finance exclusively current assets for current activities, including the coverage of employees’ salaries. The maximum amount of liquidity loan for current assets is limited to EUR 100,000 for micro and small companies, and to EUR 200,000 for medium-sized companies. In addition to current assets loans, the P1 plus 2020 tender also provides loans for financing of investment projects. In this case, the amount of an individual loan may be up to EUR 1.25 million.
On 8 May 2020, the SPS further adjusted the tender criteria and established a new loan guarantee line C.19 – Micro-guarantees for SMEs – to cover damage caused by the COVID-19 virus, which companies can use in case they need current assets for development or expansion of activities and thus to strengthen the entrepreneurship activity or for the purpose of overcoming financial difficulties in business activities caused by the COVID-19 virus. Unlike the previously mentioned loan-guarantee lines, companies with the main activity within the activity code “G – Trade, maintenance and repair of motor vehicles” can also apply for line C.19, otherwise the bank loan is subject to the same conditions as described above.
Micro companies and SMEs with their registered seat in the Republic of Slovenia, which meet additional conditions regarding employment, annual turnover, balance sheet total and project costs, can apply for the tender.
The SPS ensures that the process of obtaining a guarantee is simple and fast – the average time from the submission of the application to the approval is 1 month. Companies can submit their applications on 5 September, 20 September, 5 October and 20 October 2020.
Participating banks: Gorenjska Banka, BKS Bank, Addiko Bank, Deželna Banka Slovenije, Sberbank, Abanka, Intesa Sanpaolo, NKBM, NLB, SKB, Sparkasse, Hranilnica Lon, Primorska hranilnica Vipava, Delavska hranilnica and Unicredit.
For the already existing recipients of bank loan guarantees, the SPS gave consent to the participating banks to provide an additional moratorium for already approved loans for a period of up to 6 months, while the maturity date remains unchanged. In the event that the bank grants the borrower a moratorium of the loan for a maximum period of 12 months and a loan repayment period for the duration of the moratorium, the validity of the SPS guarantee is extended for the duration of the deferral of payment.
Microcloans for companies in problematic areas (high unemployment areas and border areas) (P7R 2019)
A total of EUR 12.9 million is available for loan in the individual amount of EUR 5,000 to 25,000 for (i) tangible investments in business premises, (ii) intangible investments in patent rights or licenses, and (iii) investments in current assets such as salaries, costs of materials, merchandise, etc.
Other measures of SPS
- Temporary closure of the voucher for market research of foreign markets;
- Closing of the public tender P4D 2019-2023 – Incentives for digital transformation of SME;
- Changed conditions of voucher calls: submission deadlines are extended by 3 months, applications are submitted electronically via the SPS ePortal with a digital certificate;
- Extension of the deadline for submitting an application in the call for incentives for the digital transformation of SMEs to 1 September 2020;
- In accordance with the Act Determining the Intervention Measures to Contain the COVID-19 Epidemic and Mitigate its Consequences for Citizens and the Economy (ZIUZEOP), the SPS may grant the borrower a moratorium of payment of obligations under the loan agreement for a maximum period of 12 months, if individual obligations from the loan agreement for which the borrower requests the moratorium of payment have not yet fallen due.