The European Commission has approved a €1billion Cypriot scheme to support enterprises and self-employed individuals in the context of the coronavirus outbreak. The scheme was approved under the State aid Temporary Framework.
Executive Vice-President Margrethe Vestager, in charge of competition policy, said: “This €1 billion scheme will enable Cyprus to support companies and self-employed persons affected by the coronavirus pandemic through the provision of State guarantees on loans. The scheme will help these companies address the liquidity shortages they face due to the ongoing crisis. We will keep working together with Member States to find the best solutions to support companies during these difficult times, in line with EU rules.”
Cyprus notified to the Commission under the Temporary Framework a scheme to support companies affected by the coronavirus outbreak and by the restrictive measures that the Cypriot government had to implement to limit the spread of the virus.
The support will take the form of state guarantees on new loans. The measure will be open to companies active in all sectors except the financial sector. The aim of the scheme is to provide liquidity for viable companies which experienced business disruption due to the coronavirus outbreak.
The Commission found that the Cypriot measure is in line with the conditions set out in the Temporary Framework. In particular, the scheme i) relates to new loans with a minimum maturity of three months and a maximum maturity of six years; (ii) foresees a coverage of the guarantee limited to 70 per cent of the loan principal; (iii) provides for minimum remuneration of the guarantee; (iv) contains adequate safeguards to ensure that the aid is channelled effectively by the financial intermediaries to the beneficiaries in need; and (v) ensures that support will be granted no later than December 31, 2021.
The Commission concluded that the measure was “necessary, appropriate and proportionate” to remedy a serious disturbance in the economy of a member state and the conditions set out in the Temporary Framework. On this basis, the Commission approved the aid measure under EU State aid rules.