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17 April 2020 / news

What should a borrower know about the Belgian COVID-19 State guarantee?

In response to the coronavirus crisis, the federal government has decided to activate a EUR 50 billion State guarantee scheme. The Royal Decree of 14 April 2020 sets out the details and elaborates on the conditions that should be fulfilled in order to benefit from the guarantee. Asking the question “what is relevant for borrowers to know?”, we have summarized some useful information in a practical and schematic overview which you can find below.

What should a borrower know about the Belgian COVID-19 State guarantee?

Preliminary remarks

  • The State guarantee will cover losses incurred by banks that cannot be recovered from borrowers, third parties or in any other way.
  • The Minister of Finance will set out the procedure that is to be used by the Eligible Lenders to activate the Guarantee. The Royal Decree retroactively applies as from 1 April 2020. Deadline for the Eligible Lenders to submit a request is 31 March 2023.

Eligible Lenders cannot call upon the guarantee in case they do not comply with another federal support measure, namely the payment deferral granted to non-financial undertakings.

Table of contents



Structure of the State guarantee

Guarantee by the Belgian federal government for portfolios of the Eligible Lenders comprised of “Guaranteed Credit”, i.e. credit having a max. term of 12 months granted to the Eligible Borrowers until 30 September 2020.

Portfolio approach, no guarantee per Guaranteed Credit

Amount of the scheme

EUR 50 billion to be allocated between the Eligible Lenders according to their market share in Belgium on 31/12/2019

Allocation of an Eligible Lender’s envelope to be determined by the Minister of Finance, on the advice of the National Bank of Belgium

Eligible Lenders

Belgian credit institutions and Belgian branches of foreign credit institutions

Ineligible: lenders with minimal market share (list to be established by the Minister of Finance)

Eligible Borrowers

All non-financial undertakings (including small and medium-sized enterprises (SMEs) and non-profit organisations) and self-employed individuals registered with the Crossroad Bank for Enterprises (i.e. Belgian entities and foreign entities with an office in Belgium)

Ineligible if:

- delays of payment on 1 February 2020 (or more than 30 days delay on 29 February 2020) regarding credit or taxes including social security; or

- pending active restructuring process with bank(s) on 31 January 2020; or

- financial difficulties on 31 December 2019 based on information available to the Eligible Lender  

- financial businesses are excluded: public entities, financial counterparties, persons whose main or exclusive activity is to offer credit on a professional basis and holding companies of financial entities (credit intermediaries and insurance intermediaries are not excluded)

- definition of ‘undertaking in difficulty’ = art. 2,18° of EU Regulation 615/2014 on State Aids (insolvency proceeding, loss of half of its capital, book debt ratio > 7,5, EBITDA interest coverage ratio <1, etc.)

Guaranteed Credit

- credit granted by an Eligible Lender to an Eligible Borrower between 1 April 2020 and 30 September 2020

- max. duration of 12 months (or unlimited duration with right to terminate by an Eligible Lender or an Eligible Borrower within the first 12 months)

- any type of credit (straight loans, credit lines, guarantees, overdraft facilities, etc.) including syndicated loans

- to finance activities of an Eligible Borrower in Belgium

- exclusions:

i. factoring, leasing, regulated consumer credit and mortgage credit

ii. refinancing

iii. new drawings or reutilisations granted before 1 April 2020

iv. credit opted-out by an Eligible Lender

v. credit applied towards non-Belgian activities of an Eligible Borrower

- refinancing: credit granted to repay a credit granted by an Eligible Lender before 1 April 2020 or an extension by an Eligible Lender of a credit granted before 1 April 2020

- new drawings / reutilisations: renewal of credit granted before 1 April 2020 for at least the same amount in principal

- in principle an Eligible Lender can opt-out in respect of an Eligible Borrower not affected by the crisis

- activities in Belgium: impossible to use any Guaranteed Credit for cashpooling or centralised treasury of a group. Limited exception for “qualified foreign activities” of an Eligible Borrower

Maximum amount per Eligible Borrower

-per group of company the lowest of max. EUR 50 million or the liquidity needs (at the exclusion of refinancing) for 18 month for SMEs and for 12 month for large companies

-the King may accept to grant a deviation upon request of an Eligible Borrower

-the Eligible Borrower will be required to issue a statement on liquidity needs and indicating it has introduced other demand of credit to cover its liquidity needs

-deviation procedure is still to be confirmed

-if the amount per Eligible Borrower or group is above > EUR 50 million, the Guaranteed Credit will not be covered

Interest and costs

-max. 1,25% interest on a yearly basis; +

-0,25 bp (SME) or 0,50 bp (large companies) (equivalent to the premium paid by an Eligible Lender to the State for its guarantee) on a yearly basis; +

-   other ordinary costs are permitted (commitment fee, etc.)

No costs which would not have been due in application of application the general terms and conditions of an Eligible Lender on 29 February 2020

Special clauses in the Guaranteed Credit

- State is substituted to the Eligible Lender for an amount up to the guaranteed losses

- credit to be allocated only to Belgian activities of an Eligible Borrower

- non-assignability of the Guaranteed Credit


Duties of the Eligible Lenders

- an Eligible Lender should recommend to the Eligible Borrower to find other available guarantees

- no undue refusal of drawing on existing credit as of 1 April 2020 and until 1 October 2020 (even if an Eligible Lender has a contractual right to refuse)

- apply market practice to the grant of credit and required collateral similar as to prior 1 April 2020

- not charge interest above the maximum allowed by the Royal Decree

- not artificially fit credit into the scheme or exclude credit from the scheme

- no joint offer with other services or products

- an Eligible Lender should not ask for additional collateral for existing credit on 1 April 2020 unless this collateral is allocated proportionally to the Guaranteed Credit

Sanction: the Eligible Lender loses part of the benefit from the State guarantee

Duties of the Eligible Borrowers


- not introduce a request if conditions are not met

- provide all information and correct information

- not use the credit for activities outside Belgium


Share of losses between State and financial sector

Losses incurred by an Eligible Lender on the Guaranteed Credit in its portfolio is only partially at the State’s expense; losses are shared as follows:

- up to 3% losses: fully covered by the financial sector

- between 3% - 5% losses: 50/50 covered by the State/financial sector

- over 5% losses: 80/20 covered by the State/financial sector



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