The European Commission has approved a €20 million Cypriot scheme to support small and medium-sized enterprises (SMEs) affected by the pandemic, it announced on Thursday.
The scheme was approved under the State aid Temporary Framework. The public support, which will take the form of loans with subsidised interest rates, will be open to SMEs active in all sectors of the economy, except for the financial sector, the Commission said.
The aid will be provided by the resources of the Cypriot Energy Fund of Funds (co-financed by the European Regional and Development Fund and the State), established by an agreement between Cyprus and the European Investment Bank (EIB) and managed by the EIB.
Under the scheme, the beneficiaries will be able to obtain the subsidised loans from a financial intermediary that will be selected by the EIB through an open and non-discriminatory selection procedure.
The purpose of the measure is to help the beneficiaries address the liquidity shortages they face and enhance their access to financing, thus helping them continue their activities during and after the outbreak, the statement said.
The Commission found that the scheme is in line with the conditions set out in the Temporary Framework. In particular, (i) the maturity of the loans is limited to six years, (ii) the annual interest rates on the loans respect the minimum levels set out in the Temporary Framework, (iii) the loan amount per beneficiary is in line with what is foreseen by the Temporary Framework, (iv) the loans relate to investment and/or working capital needs, and (v) the loan contracts will be signed by 31 December 2021 at the latest.
In addition, the measure includes safeguards to ensure that the selected financial intermediary passes on, to the largest extent possible, the advantage of the measure to the final beneficiaries.
The Commission concluded that the measure is necessary, appropriate and proportionate to remedy a serious disturbance in the economy of a Member State, in line with Article 107(3)(b) TFEU and the conditions set out in the Temporary Framework.
On this basis, the Commission approved the measure under EU State aid rules.