European Commission approves €296 million Danish loan schemes to support start-ups affected by coronavirus outbreak
The European Commission has approved two Danish loan schemes to support start-up companies in the context of the coronavirus outbreak. The loan schemes, with a total budget of approximately €296 million (DKK 2.2 billion), were approved under the State aid Temporary Framework adopted by the Commission on 19 March 2020, as amended on 3 April 2020.
Executive Vice-President Margrethe Vestager, in charge of competition policy, said: “The €296 million loan schemes will support start-ups affected by the coronavirus outbreak. These companies are at a critical stage of their economic development. The measures will help them continue during the coronavirus outbreak. They will also incentivise private investments in these start-ups by matching them with a public loan. We continue to work in close cooperation with Member States to find workable solutions to mitigate the economic impact of the coronavirus outbreak, in line with EU rules.”
The Danish support measures
Denmark notified to the Commission under the Temporary Framework two loan schemes with subsidised interest rates for start-ups. The first scheme targets companies in their early stages, while the second scheme focuses on companies having already received venture capital. The schemes have a total budget of approximately €296 million billion (DKK 2.2). The support, in the form of loans, will be managed by the Danish State public investment fund Vækstfonden.
The schemes aim at creating incentives for private investment in start-ups and at overcoming the financial gap created by the current uncertainty in the market, ensuring that these companies continue developing during and after the coronavirus outbreak. The schemes are based on a “match-lending approach” where the provision of loans will generally match private equity investments or other private loans.
The Commission found that the Danish schemes are in line with the conditions set out in the Temporary Framework. In particular, (i) they cover investment or working capital loans with a limited maturity and size, (ii) the loans will only be provided until the end of the year, (iii) they are limited in time, and (iv) they provide for adequate remuneration.
The Commission concluded that the Danish loan schemes arenecessary, 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.