In order to help Slovenian companies access liquid assets necessary for investment funding and working capital financing amid the credit crunch, the government has introduced a new measure entitled the Guarantee Scheme Act that entered into force May 1 2009 and will remain in force until December 31 2010. The Act aims to facilitate access to funding for companies incorporated in Slovenia by providing state guarantees to banks that grant loans to these companies, thereby reducing the banks' credit risk (the Guarantee Scheme). Due to recently proposed amendments to the Act, the Guarantee Scheme has not yet been applied.
Guarantees provided by the Republic of Slovenia under the Guarantee Scheme are pursuant to the wording of the Act available to "banks as defined in te Banking Act" to grant loans to companies incorporated in Slovenia. The Guarantee Scheme is explicitly not available for loans to credit institutions, insurance companies, re-insurance companies and pension funds.
Guarantees are granted for loans taken out for the purposes of funding investments and the working capital of the borrower within the scope of its regular business activities. Companies that qualify as distressed companies, and as such already receive state aid for the same purposes, are not eligible for the Guarantee Scheme. Further, guarantees are also not available for financing or refinancing activities related to management buy-outs (MBOs). Moreover, the amendments to the Act prohibit banks that receive guarantee quotas to grant any loan, secure such a loan or reprogramme existing loans related to MBOs, notwithstanding that such loans are not subject to the guarantee.
The Guarantee Scheme is limited to an aggregate amount of 1.2 billion. Every bank eligible to participate in the Guarantee Scheme may participate in an auction process in which a guarantee quota is assigned to the respective bank.
Guarantees are granted with respect to new loans with a maturity of up to 10 years and the principal amount of each loan eligible for the guarantee must not exceed the total gross annual amount of salaries disbursed to the borrower's employees in the year 2008.
The amount of a guarantee is limited up to 80% of the total loan amount.
Guarantees are irrevocable, unconditional commitments of the state to the beneficiary bank whereby the state undertakes to pay the guarantee upon the bank's first call. Accordingly, such loans are accepted as ECB eligible collateral.
Guarantees are granted by the Slovenian Export and Development Bank (SID Bank) (on behalf of the state) by inviting eligible banks to participate in auctions organized by the SID Bank. The SID Bank assigns guarantee quotas approved according to the offers made by the banks competing in the auctions.
The beneficiary bank must pay an annual commission for the guarantee. The amount depends on the borrower's credit rating assigned to it according to the rules set out in the decree of the BSI. For secured borrowers, the commission ranges from 0.4% to 0.8% of the guaranteed principal amount of the loan. For unsecured borrowers, the commission ranges from 0.4% to 2.0% of the guaranteed principal amount of the loan.
Matija Repolusk, Judith Szabo