Surety and loans from KredEx

Co-author: Kärolin Rohumäe, legal adviser

To improve liquidity, KredEx has developed crisis measures, the first of which will open at the end of this week. It should be remembered that a company intending to use KredEx measures should first contact their home bank.

The goal of the KredEx measures is to save jobs, ensure sustainability of operating activity and support the making of investments into product development and expanding production capacity.

The first KredEx package includes the following measures

• Exceptional proportional surety. The purpose of the measure is to provide companies with new turnover and investment loans to overcome the temporary difficulties caused by the outbreak of COVID-19. The coverage of Kredex is up to 90% of the guaranteed loan and leasing; up to 60% of the guaranteed loan and leasing business in the construction sector and in the retail and wholesale trade. The surety is valid for up to 72 months.[1]
  
  
• Extraordinary fixed surety. The purpose of the measure is to allow existing loans to have a longer grace period (at least 6 months) and extend the final maturity to provide temporary liquidity to overcome the temporary difficulties caused by the outbreak of COVID-19. The scope of the Kredex guarantee is up to 35% of the guaranteed loan and leasing, but not more than the sum of the lease or loan payments remaining to the company until 31.12.2021. Only those existing liabilities shall be guaranteed which shall be granted a grace period of at least 6 months from the date of granting of the grace period as of 01.03.2020 in connection with the outbreak of COVID-19. An extended obligation with no repayment profile is treated as grace period. The surety is valid for up to 72 months.[2]
  
  
• Extraordinary loan. If banks are no longer financing companies, KredEx will provide the company with an emergency working capital loan to overcome liquidity problems caused by the coronavirus outbreak or an investment loan to take advantage of the new business opportunities created by the coronavirus outbreak. The maximum loan amount is EUR 5 million. You can start applying for the emergency loan from April 3. The loan will be paid out after the state has provided the necessary capital to KredEx.[3]

! Visit the KredEx website https://www.kredex.ee/et/koroona or contact our advisors for more detailed terms and conditions for KredEx measures.

The target group for the service is all Estonian companies other than activities and sectors previously excluded by KredEx[4]. The following conditions must be met by the applicant:

• The company has been entered in the Estonian Commercial Register and the required reports have been submitted
• According to financial forecasts, the company is long-term sustainable and solvent
• The company was not a company in difficulty as at 31.12.2019
• The company has no overdue arrears on state taxes and to credit institutions that were due before 01.01.2020
• No bankruptcy or liquidation proceedings have been initiated against the company

Necessary steps for obtaining a loan

1. The entrepreneur must independently analyze what he needs to do to improve the company’s situation and thereafter contact their home bank and request a change in the schedule of payments, payment holiday or new loan.
   
   
2. The home bank will decide whether to involve KredEx and its crisis relief measures. Access to the KredEx measures is through the customer’s home bank.
   
   
3. Only if a suitable solution with the home bank cannot be reached can the business operator turn directly to KredEx and apply for an emergency loan.

KredEx encourages entrepreneurs to turn to the home bank for assistance and information immediately, as a definite readiness to resolve problems is always a wise approach in a crisis situation.

Nothing in this alert should be construed as expert advice. This alert is a generalized summary. Professional counselling should therefore be sought before any action is undertaken.

[1] Kredex. Erakorralise proportsionaalse käenduse tingimused uutele laenudele. https://www.kredex.ee/et/erakorraline-laenukaendus-uute-laenude-valjastamiseks

[2] Kredex. Erakorralise fikseeritud käenduse tingimused olemasolevatele laenudele https://www.kredex.ee/et/erakorraline-laenukaendus-olemasolevate-pangalaenude-tagasimaksegraafikute-leevendamiseks

[3] Kredex. Erakorralise otselaenu tingimused https://www.kredex.ee/et/erakorraline-laen

[4] Kredex. Erakorralise proportsionaalse käenduse tingimused uutele laenudele, page 2 https://www.kredex.ee/et/erakorraline-laenukaendus-uute-laenude-valjastamiseks

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