Loan guarantee on market terms
A loan guarantee on market terms is designed for businesses that require additional collateral for a bank loan, lease financing, or bank guarantee, but are not eligible for a standard loan guarantee due to restrictions related to state aid rules.
Please note: an EIS loan guarantee on market terms can only be provided as additional security for a new obligation (such as a bank loan, leasing transaction, or bank guarantee).
Benefits
Loan guarantee helps when the company lacks sufficient collateral or operating history
For who?
Service is suitable if
- the company is creditworthy and
- the company’s equity capital meets the requirements set forth in the Commercial Code (EIS may make exceptions if the company was registered less than 3 years ago) and
- the company does not owe state taxes and has no debt to credit institutions.
Important conditions
Guarantees are not issued the following activities and businesses:
- primary production of agricultural products; fisheries, aquaculture, and forestry
- manufacture, processing, and distribution of tobacco and related products
- financing the working capital of retail and wholesale businesses
- real estate development projects for sale or rental purposes. If real estate is developed for the company’s own use (including for subsidiaries and affiliates in activities unrelated to real estate development), part of the premises may be leased out, provided that rental income—excluding income from subsidiaries and affiliates—does not exceed 30% of the applicant’s annual turnover
- guarantees related to the payment of statutory taxes
- the decommissioning or construction of nuclear power plants
- investments aimed at reducing greenhouse gas emissions arising from activities listed in Annex I of Directive 2003/87/EC
- investments in airport infrastructure, except where these are related to environmental protection or include necessary investments to mitigate or reduce the negative environmental impact of such infrastructure
- businesses operating in the gambling sector
- financing arrangements that require the use of domestic products in place of imported goods
- sectors related to pornography, illegal downloading of data, or enabling illegal access to data networks
- research and development in the healthcare sector aimed at human cloning or the development of genetically modified organisms for scientific or therapeutic purposes
Up to 25 million euros.
Up to 80% of the underlying obligation, with an exception for the construction sector, where the maximum coverage is up to 60%.
The guarantee amount decreases in line with the reduction of the loan or lease principal.
Generally 1.04%–6.64% per annum of the outstanding guarantee amount, depending on the risk level of the project.
EIS determines the applicable fee by comparing the effective interest rate of the guarantee with the European credit default swap (CDS) index, and applies the higher of the two.
- For guarantees of up to €520,000, the fee is 0.5% of the guarantee amount, with a minimum fee of €30.
For guarantees exceeding €520,000, the fee is 1% of the guarantee amount.
The fee for contract amendments and early termination is 0.20% of the outstanding guarantee amount, with a minimum fee of €30.
For amendments related to technical terms that do not increase risk, or to changes with no or minor economic impact, the amendment fee is calculated as follows based on the guarantee amount or outstanding balance:
- up to €50,000: standard amendment fee
- over €50,000: €100 + 0.002% of the guarantee amount or outstanding balance
In the case of early termination of the contract, the fee is 1% of the outstanding guarantee amount, with a minimum of €30. This fee applies if the guaranteed obligation remains in force after the termination of the EIS guarantee agreement.
- The debt-service coverage ratio (DSCR) should be at least 1.2 after the issue of the loan, according to conservative estimates.
- Current ratio of at least 1.1.
- Equity capital makes up at least 20% of the balance sheet volume after the obligations to be assumed.
Application process
Contact a bank or leasing company to utilize the loan guarantee. To obtain the guarantee, the bank or leasing company will apply to EIS. Depending on the guarantee amount and the complexity of the project, the guarantee decision may take up to four weeks.
If necessary, EIS will contact you.
Information and application process
Service is suitable if
- the company is creditworthy and
- the company’s equity capital meets the requirements set forth in the Commercial Code (EIS may make exceptions if the company was registered less than 3 years ago) and
- the company does not owe state taxes and has no debt to credit institutions.
Guarantees are not issued the following activities and businesses:
- primary production of agricultural products; fisheries, aquaculture, and forestry
- manufacture, processing, and distribution of tobacco and related products
- financing the working capital of retail and wholesale businesses
- real estate development projects for sale or rental purposes. If real estate is developed for the company’s own use (including for subsidiaries and affiliates in activities unrelated to real estate development), part of the premises may be leased out, provided that rental income—excluding income from subsidiaries and affiliates—does not exceed 30% of the applicant’s annual turnover
- guarantees related to the payment of statutory taxes
- the decommissioning or construction of nuclear power plants
- investments aimed at reducing greenhouse gas emissions arising from activities listed in Annex I of Directive 2003/87/EC
- investments in airport infrastructure, except where these are related to environmental protection or include necessary investments to mitigate or reduce the negative environmental impact of such infrastructure
- businesses operating in the gambling sector
- financing arrangements that require the use of domestic products in place of imported goods
- sectors related to pornography, illegal downloading of data, or enabling illegal access to data networks
- research and development in the healthcare sector aimed at human cloning or the development of genetically modified organisms for scientific or therapeutic purposes
Up to 25 million euros.
Up to 80% of the underlying obligation, with an exception for the construction sector, where the maximum coverage is up to 60%.
The guarantee amount decreases in line with the reduction of the loan or lease principal.
Generally 1.04%–6.64% per annum of the outstanding guarantee amount, depending on the risk level of the project.
EIS determines the applicable fee by comparing the effective interest rate of the guarantee with the European credit default swap (CDS) index, and applies the higher of the two.
- For guarantees of up to €520,000, the fee is 0.5% of the guarantee amount, with a minimum fee of €30.
For guarantees exceeding €520,000, the fee is 1% of the guarantee amount.
The fee for contract amendments and early termination is 0.20% of the outstanding guarantee amount, with a minimum fee of €30.
For amendments related to technical terms that do not increase risk, or to changes with no or minor economic impact, the amendment fee is calculated as follows based on the guarantee amount or outstanding balance:
- up to €50,000: standard amendment fee
- over €50,000: €100 + 0.002% of the guarantee amount or outstanding balance
In the case of early termination of the contract, the fee is 1% of the outstanding guarantee amount, with a minimum of €30. This fee applies if the guaranteed obligation remains in force after the termination of the EIS guarantee agreement.
- The debt-service coverage ratio (DSCR) should be at least 1.2 after the issue of the loan, according to conservative estimates.
- Current ratio of at least 1.1.
- Equity capital makes up at least 20% of the balance sheet volume after the obligations to be assumed.
Contact a bank or leasing company to utilize the loan guarantee. To obtain the guarantee, the bank or leasing company will apply to EIS. Depending on the guarantee amount and the complexity of the project, the guarantee decision may take up to four weeks.
If necessary, EIS will contact you.