Banks are supporting over 100,000 entrepreneurs in reaction to corona crisis – 5.4 billion euros already made available
New figures (english translation will be available soon)
This is shown by the factsheet published today by the Dutch Banking Association (NVB). “Thousands of bank employees are doing everything possible to help companies,” says Chris Buijink, NVB President. “They do this diligently and as quickly as possible. However, we realise that given the current economic distress, it can never be done fast enough.” Banks are prioritising the most urgent applications and already started preparations ahead of the announcement of government measures.
Buijnk: “The corona crisis has a very large impact on many sectors in the economy. Many companies face a significant loss of turnover and are in acute need of liquidity. We have noted that postponement of current loan payments is a helpful measure, also when working towards eventually restarting the economy.”
So far over 99,000 companies have opted for a six-months postponement of loan repayments: this mostly concerns businesses with a loan up to 2,5 million euros (SMEs), totalling 2.4 billion euros. Over 5.000 businesses received a larger credit, with a combined value of 3 billion euros.
Moreover, banks will provide an additional 800 to 1000 companies with funding made possible by the broadening of the SME credit guarantee scheme (BMKB-C). The guarantee allows banks to provide between 250 to 300 million euros additional credit, which without the guarantee would not have been possible. The number of SMEs helped through this scheme is expected to rise with several thousand in the coming weeks.
In contrast to the postponement of repayments, the guarantee scheme concerns new loans for corporate clients. Therefore, companies must provide information about their financial health and the development of turnover and cash flow, which often takes time. Following the application, processing times could take an average of ten to fourteen days. This time is needed to obtain all the necessary information. Banks are obliged to make credit assessments for each application to justify the additional credit. Businesses should be fundamentally healthy in order to be able to repay the loan after the crisis. Buijink: “Not all entrepreneurs are able to carry more debt. We want to prevent companies from taking on debt that they cannot repay in the end.”
Based on current experience with the scheme, banks are consulting with the government on how to further speed up the process for companies requesting new credit lines. They are also looking into what can be done for those companies which fall outside the scope of the various arrangements.
Another, Corporate Finance Guarantee (GO-C) scheme aiming at larger SMEs and businesses, await an estimated 1000 to 1200 applications. This scheme facilitates loans up to 150 million euros per company, of which the government guarantees 80% or 90% depending on the size of the company. Banks are expected to offer billions of euros in credits to financially healthy businesses under this regulation. The government is currently finalising the details of this scheme. After its publication in the Government Gazette (Staatscourant), the banks will immediately be able to start its provision.
Around 14,000 consumers have received a pause for their mortgage payment from their bank so far. Most often this concerns a payment break of one to three months. The same applies to personal loans for around 3,500 households.
A payment break is not the only means by which banks offer private customers leniency and banks will each time take the individual situation into account.