European Commission approves Irish loan guarantee scheme mobilising €2 billion support for companies affected by the coronavirus outbreak
The European Commission has approved an Irish loan guarantee scheme to support companies affected by the coronavirus outbreak. The scheme was approved under the State aid Temporary Framework.
Executive Vice-President Margrethe Vestager, in charge of competition policy, said: “This scheme, which is expected to mobilise €2 billion of liquidity, will enable Ireland to support companies affected by the coronavirus outbreak through the provision of State guarantees. The scheme will help these companies address the liquidity shortages they face due to the crisis by enhancing access to external financing. In these difficult times, we continue to work in close cooperation with Member States to find workable solutions to facilitate the access to finance of companies affected by the coronavirus outbreak, in line with EU rules.”
The Irish measure
Ireland notified to the Commission under the Temporary Framework a scheme to support companies affected by the coronavirus outbreak.
The support will take the form of State guarantees on new loans provided by financial intermediaries to companies with up to 499 employees. The measure aims at enhancing access to external financing for these companies, thus helping them ensure the continuation of their activities.
The Commission found that the Irish measure is in line with the conditions set out in the Temporary Framework. In particular, (i) it relates to new loans with a maximum maturity of six years; (ii) it will be granted before the end of 2020; (iii) the coverage of the guarantee is limited to 80% of the loan principal; (iv) it provides for minimum remuneration of the guarantee; and (v) it contains adequate safeguards to ensure that the aid is channeled effectively by the financial intermediaries to the beneficiaries in need. With the exception of micro and small companies, companies that were already in difficulty on 31 December 2019 will not be eligible for aid under the scheme.
The Commission concluded that the scheme is 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 measure under EU State aid rules.