Article Post on 21 April 2020

COVID-19 Luxembourg State Guarantee Scheme

_On 18 April 2020, the bill of law 7545/00, has been voted, establishing a EUR 2,5 billion state-backed guarantee scheme in favour of the Luxembourg economy in the context of the COVID-19 pandemic.

The purpose of the scheme is to facilitate the granting of new loans to companies facing temporary difficulties  as a consequence of the COVID-19 crisis and to sustain the Luxembourg economy in these challenging period.

New loans granted by the participating banks (to date BCEE, BGL BNP Paribas, BIL, Banque de Luxembourg, ING, Raiffeisen and Bank of China), during the period from 18 March 2020 to 31 December 2020 will  benefit of the state guarantee system. The system will be supported at 85% by the State and 15% by the participating banks.

The guarantee scheme may not be cumulated for the same loan with other State guarantees.

The guarantee scheme will concern new loans having maturity of a maximum six years.  All type of bank loans may benefit of the guarantee but leasing is excluded.

Are eligible to such state-backed guarantee scheme, Luxembourg based, commercial enterprises, self-employed exercising liberal professions and cooperative companies which are facing temporary financial difficulties as a consequence of COVID-19 pandemic.

Are not eligible, property developers, companies whose the main object is the holding of participations and companies which were already facing financial difficulties before 18 March 2020.

The maximum amount of the eligible loans to the scheme are 25% of the turnover of the company for the year 2019 (or of the last year available). Albeit, other particular conditions are applied for young innovative companies.

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