CALL FOR EXPRESSION OF INTEREST BY
CREDIT INSTITUTIONS
Scheme Overview
The GCLS is a risk-sharing facility involving co-lending of
up to €100 million between the MDB and the accredited credit institutions on a
50:50 basis. The MDB provides an
interest rate reduction on the part of the loan granted by the MDB and a
guarantee of 60% on the credit institution’s part of the lending.
The GCLS offers favourable financing terms for bankable
projects with a special focus on SMEs particularly those involving
innovation, digitalisation and, more broadly, the preservation and enhancement
of competitiveness; socially-oriented initiatives, particularly those involving
knowledge generation, education, health and social inclusion; investment that
addresses environmental issues such as water usage, water treatment, waste
treatment, reduction and reuse; and investment aimed at achieving a high level of sustainability or to promote
the circular economy.
The GCLS caters for SMEs with large loan requirements that
exceed the maximum of €750,000 under the SME Guarantee Scheme (SGS).
The part of the loan
provided by the MDB is backed by a
guarantee from the European Investment Fund (EIF) under the Pan-European
Guarantee Fund (EGF) programme.
Information for SMEs
The purpose of the financing under GCLS covers:
- the establishment of new enterprises,
- expansion capital,
- capital for the strengthening and/or stabilisation of the general activities of an enterprise,
- the realisation of new projects, penetration of new markets or new developments by existing enterprises.
The Scheme is open to all SMEs in all economic sectors. In order to be eligible, SMEs must:
- have a viable business proposal;
- show evidence that they are able to repay the facility;
- run a commercial activity in the non-excluded activities sector.
In view of the credit enhancement and substantially reduced credit risk
exposure provided by the MDB's uncapped guarantee of 60% on each facility
provided by the partner bank, the credit institution is expected to pass on the
benefit of the guarantee to the largest extent possible to the final
beneficiaries including in the form of lower interest rates, longer loan term, enhanced
access to increased finance and lower collateral requirements. In addition, the MDB’s part of
the loan shall have a lower interest rate than that of the credit institution
in order to enhance further the attractiveness of the package.
|
Terms & Conditions
|
|
Product Name
|
Guaranteed Co-Lending Scheme for SMEs (GCLS)
|
|
Objective
|
To enhance access to bank financing for SMEs that, in spite of having
viable projects, are unable to access the required bank finance for various
reasons. The scheme addresses the following barriers to lending: (i)
inadequate collateral; (ii) lack of credit history; and (iii) novel business
market, sector or technology that is perceived by finance providers as higher
risk under current credit risk evaluation practices. The GCLS caters for SMEs
with larger loan requirements that exceed the maximum of €750,000 under the
SME Guarantee Scheme.
|
|
State Aid
|
The GCLS will be implemented in line with the provisions of the De
Minimis Regulation, the General Block Exemption Regulation (GBER) and
Covid-19 Temporary Framework section 3.1 (TF).
|
|
Term of loans
|
The Scheme offers
three types of loan tenors: with a maximum of 10 years, 12 years and 15 years.
The tenor of the loan determines the applicable state aid regime as follows:
a)
Up to 10 years – De Minimis
b) Up to 12 years –
GBER
c)
Up to 15 years – TF
|
|
Last date for
inclusion of loans under the scheme
|
Up to 31 December
2024
|
|
Last date for
inclusion of loans under the scheme if the loan provided by the MDB is to be
covered by the EGF guarantee
|
Up to 31 December
2022
|
|
Benefit pass-through
|
The benefit of
the MDB guarantee shall be passed on to the final beneficiaries in the form
of lower interest rates charged by the credit institutions, lower collateral
requirements and a longer loan term.
|
|
Interest rates
|
The interest rate
charged to the end beneficiary will be set by the credit institution. The
MDB’s rate shall be lower than that of the credit institution.
|
|
Minimum loan size
|
€750,001.
|
|
Maximum loan size
|
€10,000,000 (depending
on term of loan and choice of State Aid regime).
|
|
Loan amounts -
Compatibility with State aid regimes
|
The following are
the maximum loan amounts compatible with each of the three alternative state
aid regimes:
- €10,000,000 –
(€5,000,000 MDB and €5,000,000 Credit institution) – GBER. - €3,300,000
(€1,750,000 MDB and €1,750,000 Credit institution) – De Minimis. - €2,800,000 –
(€1,400,000 MDB and €1,400,000 Credit institution) – TF
|
|
Borrower’s front
contribution towards the project
|
Minimum of 20%
upfront contribution.
|
|
Moratorium on
capital repayments
|
Maximum 24 months
(at the start of the repayment period).
|
|
Loan Purpose / Eligible
Costs
|
The projects financed under the GCLS must not have commenced before
the sanctioning of the loan. Moreover, the GCLS cannot be used to refinance
existing facilities held by the borrower. Eligible costs under the GCLS are:
(A) Cost of
investment in tangible and intangible assets.
(B) Other
investment-related working capital including the estimated wage costs of
employment directly created by the investment project (subject to terms and
conditions), calculated over a period of two years, subject to a maximum
amount of not more than 20% of the total loan amount.
In order to be
considered an eligible cost, an investment shall consist of an investment in
tangible and/or intangible assets relating to:
·
the establishment of new enterprises,
·
expansion capital,
·
capital for the strengthening and/or
stabilisation of the general activities of an enterprise,
·
the realisation of new projects, penetration of
new markets or new developments by existing enterprises,
·
working capital related to the new investment,
·
the acquisition of an asset belonging to another
establishment, subject to terms and conditions as provided by the GBER
regulation.
|
|
Eligible borrowers
|
The scheme is
open to all SMEs in all economic sectors except the excluded and prohibited
activities. Furthermore, SMEs active in sectors specifically excluded in
Article 1 of the De Minimis Regulation, are ineligible.
|
|
Restricted and
Prohibited Activities
|
Click here for
the full list.
|
|
Application
process for SMEs wishing to benefit from the Scheme
|
SMEs wishing to
benefit from the Scheme shall apply at an accredited credit institution. The
application submitted by the SME shall include the following information: (a)
undertaking's name and size; (b) description of the project, including its
start and end dates; (c) location of the project; and (d) list of project
costs (e) business plan and cash flow projections (f) recent financial
statements.
|
Information for credit institutions interested in being accredited as intermediaries
The targeted GCLS global loan portfolio is €100 million of
which €50 million will be originated by MDB and €50 million by the
participating credit institutions. MDB shall
provide an additional guarantee of €30 million on the €50 million loans by the
participating credit institutions.
The global loan portfolio will be apportioned by the MDB
between the implementing credit institutions participating in the GCLS on a
first-come-first-served basis.
The guarantee fee
charged by the MDB on the 60% guarantee on the loan by the credit institution shall
be as follows:
- Loans with a maturity of 10-years agreed upon at inception of loan will carry
a guarantee fee of 1.49% on the guaranteed amount (equivalent to 0.89% at
facility level);
- Loans with a maturity of 12-years agreed upon at inception of loan will carry
a guarantee fee of 1.50% on the guaranteed amount (equivalent to 0.90% at
facility level);
- Loans with a maturity of 15 years agreed upon at inception of loan will carry
a guarantee fee of 1.51% on the guaranteed amount (equivalent to 0.91% at
facility level).
Accredited intermediary credit institutions benefit from:
- Lower
credit risk exposure;
- Efficient
use of capital and lower impairment charges to the profit and loss;
- Enhanced
opportunity to increase the size of the balance sheet and profitability;
- Greater
flexibility in adhering to the risk appetite framework;
- Higher
client retention due to increased fulfilment of customers’ requests;
- Enhanced
customer relationship.
To become an intermediary partner of the GCLS,
interested credit institutions need to fill in the Expression of Interest form
which can be downloaded from the link below. Applicants must be able to
address all points to the satisfaction of the MDB in order to be considered for
further negotiations. The negotiations with successful applicants are concluded
by the signing of a Risk Sharing Agreement and an Operational Agreement. These
agreements regulate the rights and obligations of the Parties and stipulate the
economic terms of the Scheme. In particular, they provide for the terms of
the guarantee, the inclusion and exclusion process of transactions covered by
the guarantee, eligibility criteria in relation to borrowers and transactions,
recoveries, general and information undertakings, representations by the
Parties, reporting forms and confidentiality obligations.
All relevant details and documentation can be found below:
|
Application documents
for the SME Guarantee Scheme
|
|