Guaranteed Funding for Entrepreneurs Coronavirus Outbreak (“GO-C Scheme”)
The GO-C Scheme is a government measure that helps entrepreneurs with liquidity problems resulting from the corona crisis. This is a crisis measure in addition to the existing GO scheme, which was created during the economic crisis in 2009, and the SME Credit Guarantee Scheme that was widened because of the corona crisis (the “Widened BMKB”, which was introduced for credits up to EUR 1.5 million).
The GO-C Scheme makes it easier for companies to attract funds from banks, because the state gives the banks a guarantee for loans to companies for which that guarantee is applied for and granted.
80% or 90% state guarantee
Banks may receive either an 80% (large businesses) or a 90% (small and medium-sized businesses) state guarantee. These percentages are much higher than in the existing GO scheme, which provides for a state guarantee of 50%. Loans starting from EUR 1.5 million up to a maximum of EUR 150 million can be guaranteed. Small and medium-sized companies are companies that (i) employ less than 250 persons, and (ii) have an annual turnover of no more than EUR 50 million and/or a balance sheet total of no more than EUR 43 million.
Conditions set to companies and funding
Several conditions are attached to applications for these state guarantees. For example, the following demands are set on the company:
- The company applying must be a Dutch company with substantial activities in the Netherlands;
- It must be essentially healthy;
- It must have satisfactory profitability and continuity prospects;
- No excessive withdrawal of capital within the last 12 months;
- Funding of liquidity deficits as a result of the corona crisis.
The actual funding is also subject to several requirements. For example, the term of the loan can be 6 years maximum. In principle, the principal amount cannot be more than 25% of the borrower's turnover in 2019 or more than twice the annual wage cost of the entrepreneur in 2019. If the entrepreneur can give sound reasons based on his liquidity requirements and a liquidity plan, the amount of the loan may be increased to cover the liquidity requirements needed for the coming 18 months after the loan is awarded.
In addition, there is a minimum commission that will be charged to the bank for the state guarantee and that will be passed on to the company. Furthermore, the usual interest must be charged as in situations without the state guarantee. Both loans with a fixed interest and loans with a variable interest based on Euribor rates are eligible for the GO-C scheme.
The bank must make an effort to ensure that additional securities are vested for the benefit of the bank for the new funding, in order to limit the risk of the state (and the bank).
Fresh Money requirement
Another important requirement is that the funding has to be ‘Fresh Money’. It must be a new loan, new money from the bank, rather than a guarantee for an existing loan. If a bank takes over the position from another bank (not belonging to the same group as the first bank), this too is regarded as fresh money. However, this requires consultations in advance with the Netherlands Enterprise Agency (RVO), which implements this scheme.
There is no Fresh Money if the GO-C scheme is used as a tool of acquisition (takeover of share capital), if a convertible subordinated loan is replaced, or if it serves as a tool to acquire more favourable conditions. There is also no Fresh Money if there is refunding due to a breach of covenants under the existing facility.
Not for any kind of enterprise
The scheme is not intended for businesses in the real estate sector (excluding brokerage), the financial sector (in this case: banks, insurers, investment companies or private equity companies), the health care sector, and associations and foundations working solely in the field of public housing (such as housing associations or housing foundations).
Which banks
At the moment, the participating banks are the following: ABN AMRO Bank, BNP Paribas, Deutsche Bank, ING, NIBC Bank, Rabobank, Triodos Bank. Applications under the Scheme may be submitted by the participating banks up to and including 15 December 2020.
Questions and Advice
If you have any questions about the GO-C scheme, or need advice when applying for a credit to your bank, please contact Bart de Man, Joris van Horzen or Jeroen Postma.