Brussels, 20 March 2020
In the context of the COVID-19 outbreak, the European Commission decided to adopt, on the 20th of March, a Temporary Framework to enable Member States to use the full flexibility foreseen under State aid rules, enabling them to ensure sufficient liquidity for businesses of all types and to preserve the continuity of economic activity during and after the COVID-19 outbreak.
Based on Article 107(3)(b) of the Treaty on the Functioning of the European Union, the State aid Temporary Framework provides for five types of aid:
- Direct grants, selective tax advantages and advance payments: Member States will be able to set up schemes to grant up to €800,000 to a company to address its urgent liquidity needs.
- State guarantees for loans taken by companies from banks: Member States will be able to provide State guarantees to ensure banks keep providing loans to the customers who need them.
- Subsidised public loans to companies: Member States will be able to grant loans with favourable interest rates to companies. These loans can help businesses cover immediate working capital and investment needs.
- Safeguards for banks that channel State aid to the real economy: some Member States plan to build on banks' existing lending capacities and use them as a channel for support to businesses – in particular to small and medium-sized companies. The Framework makes clear that such aid is considered as direct aid to the banks' customers, not to the banks themselves, and gives guidance on how to ensure minimal distortion of competition between banks.
- Short-term export credit insurance: The Framework introduces additional flexibility on how to demonstrate that certain countries are not-marketable risks, thereby enabling short-term export credit insurance to be provided by the State where needed.