State aid: Commission approves state support for €250 million Latvian subsidised loan scheme and loan guarantee scheme for companies affected by coronavirus outbreak
The European Commission has found Latvian loan guarantee scheme and subsidised loan scheme for companies affected by coronavirus outbreak to be in line with EU State aid rules. The schemes were approved under the State aid Temporary Framework to support the economy in the context of the COVID-19 outbreak adopted by the Commission on 19 March 2020.
Executive Vice-President Margrethe Vestager, in charge of competition policy, yesterday said:
“With these two measures Latvian companies affected by the coronavirus outbreak can mitigate the current extremely difficult situation. The Latvian schemes of €250 million Euros are an important contribution to reaching this objective. With this decision we continue working with Member States to ensure timely, coordinated and effective action under the new State aid Temporary Framework.”
The Latvian support measures
Latvia notified to the Commission a subsidised loan scheme and a loan guarantee scheme for companies affected by the coronavirus outbreak under the Temporary Framework. The overall budget for the subsidised loan scheme is €200 million, out of which €50 million is envisaged from the State budget and the rest from the international financial institutions. The amount envisaged in the State budget for the loan guarantee scheme is €50 million. It is expected to be leveraged and cover guarantees worth over €200 million.
The schemes aim at enhancing the access to external financing for those companies that are most severely affected by the economic impact of the coronavirus outbreak. The objective of the measures is to ensure that these companies can continue their activities faced with the difficult situation caused by the coronavirus pandemic.
The Commission found that the Latvian measures are in line with the conditions set out in the Temporary Framework.
In particular, they entail:
- Guarantees at reduced guarantee fees on loans with limited maturity and size. The measures limits the risk per loan taken by the State to a maximum of 50%; and
- Working capital loans at reduced interest rates with limited maturity and size.
This ensures that support is swiftly available at favourable conditions and limited to those who need it in this unprecedented situation. To achieve this goal, the measures also involve minimum remuneration and safeguards to ensure that the aid is effectively channelled to the beneficiaries in need.
The Commission concluded that that the Latvian loan guarantee scheme and subsidised loan scheme will contribute to managing the economic impact of the coronavirus in Latvia. The measures are necessary, appropriate and proportionate to remedy a serious disturbance in the economy of a Member State, in line with Article 107(3)(b) TFEU and the conditions set out in the Temporary Framework.
On this basis, the Commission approved the measures under EU State aid rules.
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