Covid-19 : The Belgian federal government aims to guarantee sufficient financing and liquidity for Belgian enterprises

23 Mar 2020

Last Sunday, 22 March 2020, the Minister of Finance and the Belgian financial sector through Febelfin announced a series of measures to support lending to Belgian businesses and individuals during the initial fall-out of the Covid-19 crisis.[1]

The support package consists of two pillars:

  • assistance to businesses (including self-employed professionals) and individuals impacted by the corona crisis in the form of a suspension of all payment obligations (interest and principal) on their loans, free of charge, until 30 September 2020; and 
  • assistance in the form of guarantees for new loans and loan facilities that would be granted up to 30 September 2020 with a maximum duration of 12 months.

The measures are aimed at supporting “viable” businesses only. Refinancing is explicitly excluded from coverage. The guarantee scheme would provide support for an aggregate guaranteed amount of up to EUR 50 billion. Following the expiration of the guarantee scheme, aggregate losses will be measured at portfolio level and allocated between the financial sector and the government as follows:

  • first losses up to 3% will be supported by the financial sector;
  • losses between 3% and 5% will be split 50/50 between the financial sector and the government; and
  • losses over 5% will be absorbed for 80% by the government.

Further details in respect of the measures are expected in the coming hours and days. We expect these to include further specification as to what is to be understood by a “viable” business, the interest that may be charged on new loans and facilities covered by the guarantee scheme, and any guarantee fee that will need to apply in order to make the scheme compatible with State aid rules.

While further details may be forthcoming, based on the announcements made so far, we expect that many questions will arise in the coming days as to the scope of the scheme, e.g.:

  • Refinancing has been said to be excluded. What about refinancing loans with another bank?
  • Does the guarantee scheme also apply to financing forms other than bank lending, such as leasing, factoring schemes and direct lending by insurers?
  • How does the guarantee interact with security interests granted at the level of the bank (so-called “all sums security interests”), in particular in respect of the loss allocation following expiration of the scheme?
  • What is the interaction with credit insurance?

Your banking and finance team will be closely monitoring further developments and the implementation of the guarantee scheme in the coming days and weeks. If you have any questions on the impact and implementation, please do not hesitate to reach out.


Contact us

Ivan Peeters

Ivan Peeters

Partner, PwC Legal BV/SRL

Tel: +32 476 96 32 68

Philip Van Steenwinkel

Philip Van Steenwinkel

Advocaat vennoot / Avocat Associé, PwC Legal BV/SRL

Tel: +32 486 37 04 64

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