What does the proposal for Intervention Measures on additional liquidity to the economy to mitigate the effects of the COVID-19 infectious disease epidemic Act bring?

23 April, 2020

The basic principle of the proposal for Intervention Measures on additional liquidity to the economy to mitigate the effects of the COVID-19 (ZDLGPE) (hereinafter also referred to as the "Act Proposal") is to provide liquidity to the Slovenian economy in order to mitigate the effects of the COVID-19 epidemic and prevent serious economic damage.

The Act Proposal regulates the suretyship of the Republic of Slovenia given to banks and savings banks established in the Republic of Slovenia or branches of banks of other Member States established in the Republic of Slovenia, which can legally provide banking services in the territory of the Republic of Slovenia. A suretyship will be given for loans that meet the following conditions:
- the loan is approved after 12 March 2020 and no later than 31 December 2020;
- the purpose of the loan is to finance working capital, to finance the repayment of obligations arising from credit agreements concluded between 13 March 2020 and the date on which the Act Proposal will enter into force, and lastly, to assure help in regard to new or the completion of already initiated fixed capital formations;
- the maturity of the loan does not exceed five years;
- the loan is not intended for financing affiliated companies or companies domiciled abroad.

The suretyship will be given only for loans, whose borrowers were not considered as a company in difficulties before 31 December 2019 and are facing difficulties only after the respective date, due to business reasons arising from the COVID-19 epidemic. In addition, the borrower must meet all obligations arising from compulsory contributions, taxes and other charges. Furthermore, the Act Proposal stipulates that a borrower who has been granted a loan by the bank and receives suretyship pursuant to this Act Proposal may not pay financial gains, rewards for business performance to the members of the management, acquire its own shares or ownership interests or pay other financial liabilities to the parent/affiliated companies or owners for the period from the filing of the loan application to the termination of the bank's right to exercise the suretyship.

The Act Proposal authorizes SID - Slovenian Export and Development Bank to perform all operations related to suretyships. The proposed amount of an individual suretyship is 70% of the principal given to a large company and 80% of the principal given to a micro, small or medium-sized company.

The Act Proposal also addresses the issue of rents. The tenants of commercial buildings or business premises owned by the Republic of Slovenia or by self-governing local communities, who cannot carry out its economic activity or for who carrying out such an activity was made substantially difficult due to state measures and the spread of the virus during the duration of the COVID-19 epidemic in the territory of the Republic of Slovenia (declared on 13 March 2020 until cancellation), are fully or partly exempted from paying the rent. The eligibility for such exemption will be decided by the head of the operator or the body responsible for the implementation of the budget of the self-governing local community.

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