State-guaranteed Loans Extended until End-June 2021

Luxembourg's Ministry of Finance has announced the extension of the state-guaranteed loan regime until 30 June 2021.

At the request of the Minister of Finance, Pierre Gramegna, representatives of the Luxembourg Bankers Association (ABBL) and of the BCEE, BIL, BGL BNP Paribas, Banque de Luxembourg, Raiffeisen, ING, Bank of China and Banque BCP banks agreed on the extension of the scheme for state-guaranteed loans for the benefit of the Luxembourg economy in the context of the COVID-19 pandemic.

Under this regime, which was established by the law of 18 April 2020, the state guarantees bank loans granted to companies to the tune of €2.5 billion. Companies can request from their bank a loan amounting to 25% of their turnover and benefit from a state guarantee of 85%. Large companies, small and medium-sized enterprises (SMEs) and the self-employed, including young innovative companies, are eligible to apply for these bank loans.

From the date of establishment of the scheme until 11 December 2020, banks granted state-guaranteed loans of around €170 million to more than 300 companies. Participating banks have also granted COVID-19 loans without a state guarantee to the tune of almost €260 million.

Finance Minister Pierre Gramegna commented: “In this crisis, banks are part of the solution. In recent months, the moratoriums granted by the banks have notably given a breath of fresh air to companies. In addition to the other aid and measures put in place by the government, the COVID-19 loans guaranteed by the state have in turn provided the liquidity necessary to finance the recovery. As the moratoriums expire on 31 December 2020, the extension of the loan regime will ensure a smooth transition and allow the mobilisation of essential investments to build the future. The banking sector continues to show solidarity in this crisis that is hitting us all”.

Guy Hoffmann, President of the ABBL, added: “The extension of the state guarantee programme reflects the continued commitment of the banking sector alongside Luxembourg entrepreneurship and commerce. The Ministry of Finance and the banks united within the ABBL have once again demonstrated their ability to cooperate to set up a system capable of providing the necessary cash flow to businesses and professionals throughout the territory, to help them overcome the major economic stress we are experiencing and support them in the recovery phase”.