ANNOUNCEMENT 24 Mar 2020

In March 2020, the European Commission approved the German notified loan guarantee scheme to support local companies following the outbreak of COVID-19.

NUMBER OF INTERVENTIONS

1

  • 1 harmful
  • 0 neutral
  • 0 liberalising

SOURCE

Letter to the Member State - State Aid SA.56787 – Germany - COVID-19: Bundesregelung Bürgschaften 2020, issued on 24 March 2020: https://ec.europa.eu/competition/state_aid/cases1/202013/285202_2142382_66_2.pdf
SA.56787 COVID-19: Bundesregelung Bürgschaften 2020: https://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_56787

Inception date: 24 Mar 2020 | Removal date: 31 Dec 2020

Loan guarantee

On 24 March 2020, the EU Commission approved the German loan guarantee scheme Bundesregelung Bürgschaften 2020. The scheme was introduced following the outbreak of COVID-19 and is in force until 31 December 2020. The budget of the scheme has not been disclosed to the public. 

The scheme will be implemented by various German federal and regional authorities, federal promotional banks and regional authorities and the guarantee banks. Eligible beneficiaries are companies located in Germany, of all sizes and operating in any sector. However, financial institutions and companies which were not in financial difficulty before 31 December 2019 are not eligible. The guarantee will up to 90% of the loan. 

In this context, the EU Commission noted: "The measure is liable to distort competition, since it strengthens the competitive position of its beneficiaries. It also affects trade between Member States, since those beneficiaries are active in sectors in which intra-Union trade exists."

The Commission approved the state aid: "... on the grounds that it is compatible with the internal market pursuant to Article 107(3)(b) of the Treaty on the Functioning of the European Union."

The state aid is approved under the Temporary Framework under the State Aid. The European Commission adopted the Temporary Framework under the State Aid rules of the European Union on 19 March, see related state act. 

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