One year after the first state-guaranteed loan was issued, Luxembourg's State Treasury has recorded a total of 382 such loans amounting to over €176 million.
On 5 May 2020, the first loan taken out by a company under the state-guaranteed loans scheme took effect. Since then, the State Treasury, which is in charge of the management of guaranteed loans, has recorded 382 such loans amounting to €176.25 million, of which the Luxembourg state guarantees 85%, i.e. €149.8 million.
In terms of loan distribution by sector, it is the trade sector that has benefited most from guaranteed loans (around 28.3%), followed by the accommodation and catering sector (19.9%) as well as construction (17%).
Luxembourg's Minister of Finance, Pierre Gramegna, commented: “The guaranteed loan regime is a flagship instrument that allows our entrepreneurs and businesses to face the pandemic and prepare for recovery. I would like to thank the banks which took their responsibilities and showed solidarity in this crisis by making this regime possible, in addition to the moratoriums on loans granted at the start of the crisis. Through the guaranteed loan regime, which is a useful addition to the range of their traditional products and services, banks continue to play a leading role in supporting the end of the crisis”.
The scheme, which was announced on 25 March 2020 as part of the economic recovery programme, was a success from the first months of its implementation, showing a pronounced need for this type of aid for businesses. In the first three months alone, the state granted 222 guaranteed loans for a total amount of €95.6 million.
On 21 April 2020, Minister Pierre Gramegna signed the agreement governing the guaranteed loan scheme with representatives of the banks BCEE, BIL, BGL BNP Paribas, Banque de Luxembourg, Raiffeisen, ING, Bank of China and Banque BCP.
Through this guaranteed loan scheme, the state guarantees up to €2.5 billion of bank loans to businesses over a maximum period of six years. Companies can ask their bank to take out a loan that can amount to up to 25% of their turnover and which will benefit from a state guarantee of 85%.
Initially limited in time until 31 December 2020, the scheme has been extended until 30 June 2021. Currently, Bill No. 7804, tabled in the Chamber of Deputies (Parliament) last month, provides for an additional extension until 30 December 2021.
To date, the Luxembourg state has not yet had to intervene as a guarantor on an unpaid loan, which, according to the Ministry of Finance, demonstrates the resilience of the Luxembourg economic fabric and the resumption of activity observed in recent months.
