All banks can include part of the envelope in new additional loans and credit lines up to a maximum term of 12 months in proportion to their market share in outstanding loans and credit lines (all loan terms) granted to viable non-financial businesses, SMEs, self-employed persons and non-profit organisations on 31 December 2019. This market share is ascertained on the basis of FINREP (table 20.04) and scheme A (table 02.11) reporting and notified to all institutions by an individual standard NBB letter.

The guarantee does not apply to individual loans but to the whole portfolio of new additional loans granted by the bank concerned to Belgian non-financial businesses, SMEs, self-employed persons and non-profit organisations.

Once the guarantee scheme ends, the amount of losses recorded on loans under the guarantee scheme will be examined.

The Royal Decree applies to these loans as well. There are three possibilities:

1. The loan falls outside the scope of the Royal Decree (e.g. reinstatement, refinancing etc.). No special action is required.
2. The loan qualifies as a “guaranteed loan” within the meaning of Article 4, § 1 of the Royal Decree. Two options:
   1. Unless the bank deselects the loan in accordance with Article 4, § 1, 4°, the Royal Decree applies to the loan and the bank should, where appropriate, agree with the customer on an amendment to the loan agreement;
   2. The bank deselects the loan to exclude it from the guarantee scheme (see question 3.17 et seq. for further details). The choice to deselect may only be made at the time the loan is granted; as such a choice can only be made in casu from 15 April 2020, banks exceptionally will have until the first planned monthly reporting to deselect loans granted between 1 and 15 April 2020.

The total state-guaranteed reference-portfolio will only be known on 1 January 2021, so that, at that time, the final 3% and 5% thresholds can be calculated for each credit institution on the actual total amount of until 31 December 2020 granted loans of maximum 12 months to the before the crisis viable Belgian non-financial undertakings which do not constitute a refinancing or a reinstatement of credit granted before 1 April 2020 to those customers and which do not exclusively serve to finance the foreign activities of the undertaking concerned. This reference-portfolio may be lower than, or at most equal to, the share of the € 50 billion envelope allocated to each bank. From 1 October 2021, and thereafter on the first day of each successive quarter, a bank will be able to submit an application requesting an interim advance from the federal government.

The losses will be calculated at the level of the total portfolio of new additional loans for each bank. In practice, this means that if bank X incurs a loss of 4 % on its total reference-portfolio, bank Y incurs a loss of 1% and bank Z a loss of 6%, then the guarantee will be activated for banks X and Z according to the losses suffered (50 % government guarantee for losses between 3% and 5%, and 80% for losses in excess of 5%).

In principle, all new additional loans and credit lines to viable Belgian undertakings with a maximum term of 12 months granted by the bank between 1 April 2020 and 31 December 2020[1], including the credits which have been repaid before 31 December 2020 must be covered by the guarantee scheme (until the bank’s share in the total envelope is reached).

The following credits do not fall within the scope of the guarantee scheme:

1. refinancing loans which serve to repay loans granted before 1 April 2020;
2. reinstatements of credits granted before 1 April 2020;
3. credits granted to persons where the contract states that they can exclusively be used for the non-Belgian activities of this person;
4. credits which have been specifically identified by the bank as deselected credits, for which the bank opts to keep them out of the scope of the guarantee scheme (cf. infra);
5. leasing contracts;
6. factoring contracts;
7. consumer loans and mortgage loans which are governed by Book VII of the Code of Economic Law.

Loans up to a maximum of € 50 million are guaranteed for each business or group of associated businesses (cf. definition of associated company in the Companies Code) on outstanding (reinstated and not repaid) or available (not taken up) amounts. The “rolling stock” principle is used for the calculation of this amount, which means that guaranteed credits which have been repaid partially or in whole before 31 December 2020 can be replaced by new guaranteed loans. For larger amounts, government approval must be obtained. The application procedure for the approval is governed by a Ministerial Decree of 29 April 2020.

[1] The first guarantee scheme initially guaranteed loans granted until 30 September 2020; this period was extended until 31 December 2020 by Royal Decree of 16 September 2020.

The guarantee scheme applies to all new additional loans and credit lines to all before the crisis viable customers with a maximum term of 12 months, except for the credits mentioned in the answer to question 3.15, and taking account of the limit of € 50 million (per counterparty or group of related counterparties), above which government approval must be obtained.

For the purposes of Article 8, § 1 of the Royal Decree, the NBB assumes that it should always be possible to determine a liquidity need on the basis of which the loan is granted and that, pursuant to Article 4 of the Royal Decree, eligible loans are hence guaranteed by the State guarantee. For guarantee loans specifically, the liquidity needs can be filled in as “the need for commitments by the borrower underlying the granting of the bank guarantee”.

The choice of whether or not to include a loan in the guarantee scheme is made exclusively when the loan is granted and is irrevocable. In this context, it is possible to grant both guaranteed and non-guaranteed loans to the same borrower.

On 31 December 2020, a deselection factor (exclusion factor) is calculated which is defined as a fraction with the following numerator and denominator: 

• the numerator consists of the sum of the maximum available principal amount of each deselected loan on the date of granting, for all (deselected) loans granted from 1 April 2020 until 31 December 2020, multiplied in each case by a factor equal to the duration of the deselected loan, expressed in days. Deselected loans with a contractual maturity date prior to 31 December 2020 are also included in this numerator;
• the denominator consists of the sum of the maximum available principal amount of each guaranteed (not deselected) loan on the date of granting, for all guaranteed (not deselected) loans granted from 1 April 2020 until 31 December 2020, multiplied in each case by a factor equal to the duration of the guaranteed loan, expressed in days. Guaranteed loans with a contractual maturity date prior to 31 December 2020 are also included in this denominator.

If there is a positive difference between the deselection factor and 0.175, the guarantee fee due on the guaranteed (not deselected) loans is multiplied by a factor equal to one plus twice the aforementioned difference.

Example by way of illustration: a bank grants loans between 1 April 2020 and 31 December 2020 for a total amount of 100 on the date of granting:

• on 1 April, a deselected loan of 10 for a term of 30 days
•  on 1 May, a loan of 30 for a term of 60 days
•  on 1 June, a loan of 55 for a term of 120 days
•  on 1 September, a deselected loan of 5 for a term of 360 days

Deselection factor = [(10 * 30) + (5 * 360)] / [(30 * 60) + (55 * 120)] = 0.25

In the above example, the reference portfolio on the basis of which the State's intervention is calculated is 100, even if the 'deselected' loans are not covered by the guarantee and the guarantee fee for these credits does not have to be paid. However, given that the deselection factor exceeds 0.175, the guarantee fee payable on the guaranteed (unselected) credits has to be multiplied by a factor of 1.15 (i.e. one plus twice the difference between the deselection factor of 0.25 and 0.175).

No. The guarantee applies to the whole of the outstanding or available amounts on new and additional loans obtained from all Belgian banks up to a maximum of €50 million per business or group of associated businesses. If the aggregate outstanding or available amount of guaranteed new and additional loans exceeds that figure, government approval must be obtained and the bank therefore cannot take the decision alone.

Yes, insofar the distinct credit of the participating bank in the syndicate constitutes a sufficiently separated engagement. The guarantee scheme also does not apply to syndicated loans with a maximum duration above 12 months nor to deselected syndicated loans.

That is a reinstatement of an existing credit/existing credit line which is not covered by the guarantee scheme.

Yes, the difference between the higher line (e.g. € 110,000) and the existing line (€ 100,000) is then a new loan that comes under the guarantee scheme. This new loan must then be structured as a separate new loan (of € 10,000, for example) with additional security where possible.

Yes, in the case of new additional loans or credit lines in relation to the amount of loans and credit lines outstanding on 1 April 2020. The guarantee scheme aims at facilitating the granting of new additional credits or credit lines.

It should be noted that, if the loan amount is less than double the total annual wage costs, including social charges, or less than 25% of the borrower’s turnover in the last closed financial year, liquidity needs do not necessarily have to be taken into account for granting a loan under the second guarantee scheme, as a result of the amendment of art. 8, §1, 2° of the Royal Decree of 14 April 2020 by art. 5, b) of the Royal Decree of 16 September 2020, which entered into force on 28 September 2020.

If they are nevertheless taken into account, Article 8, § 1, 2° of the Royal Decree of 14 April 2020 limits the guaranteed principal to the amount of the borrower's liquidity needs, other than for refinancing loans taken out to repay or reinstate loans granted before 1 April 2020. The financing of repayments of a loan granted by the same or another lender prior to 1 April 2020 qualifies as a refinancing loan within the meaning of Article 1, 13° of the Royal Decree regulating the State guarantee, falls outside the guarantee scheme and may therefore not be included in determining the liquidity needs under Article 8 of the Royal Decree.  The reason is that a guaranteed loan is not intended to be used to repay an existing loan (OLD MONEY). Moreover, if the conditions of the Business Loan Charter are met, (capital) repayments are eligible for deferral of payment.

On the other hand, the lender should identify the overall liquidity needs of the borrower in order to be able to correctly assess the risks. However, the lender may include repayments of loans granted before 1 April 2020 in this exercise without, however, including them in determining the liquidity needs under the (specific) framework of Article 8 of the Royal Decree. Therefore, for the purposes of determining the amounts covered by the guarantee scheme (NEW MONEY), the repayments are best treated separately in the liquidity simulator.

The guaranteed principal of the guaranteed loans granted to a borrower may not exceed the highest of the following amounts, calculated at the level of the group to which the borrower belongs:

1° the borrower’s liquidity needs during a period (starting from the intended date of the granting of the guaranteed loan) of 18 months for SMEs within the meaning of Regulation No 651/2014 and 12 months for other enterprises, as estimated by the borrower in a duly reasoned written statement;

2° the double of the borrower’s total annual wage costs, including social charges, in the last closed financial year;

3° 25 % of the borrower’s turnover in the last closed financial year.

Points 2° and 3° above were added to art. 8, §1, 2° of the Royal Decree of 14 April 2020 by art. 5, b) of the Royal Decree of 16 September 2020, which entered into force on 28 September 2020.

The resulting maximum guaranteed principal should be reduced by the principals of the loans granted to the borrower or other companies belonging to the group of the borrower under the second guarantee scheme.

Yes, the credits enumerated in question 3.15, as well as new additional loans for a term of longer than 12 months or in excess of the € 50 million limit.

No. The guarantee scheme does not apply to the on 1 April 2020 existing loans, nor to the unused amounts on the on 1 April 2020 existing credit lines.

Banks must call on the State guarantee by 30 June 2023 at the latest for the guaranteed loans, and this independently of the date of granting or the duration of the loan.  Only then should a decision be taken as to whether or not to terminate the customer relationship. In the meantime, forbearance measures can be taken.  The diagram below gives an overview of the various possibilities

3.35/1 If a forbearance measure is a deferral of payments (e.g. in the form of a repayment schedule, extension of the initial loan or otherwise) on the guaranteed loan, are the parties bound by the maximum period of the guaranteed loan (12 months under the first guarantee scheme)?  

No, the maximum period of 12 months does not apply here. Please refer to the schedule as included in question 3.35: a forbearance measure can only be granted up to the last date on which the State can be called upon to honour the State guarantee. This last date is 30 June 2023 for the first guarantee scheme. 

“Proportionate application” means that, if a forbearance measure is granted in the form of a deferral of payments on a guaranteed loan, the other loans not covered by the State guarantee should also benefit from a payment deferral for at least the same period.

For example, if a forbearance measure is granted for a guaranteed loan, in the form of a payment deferral (e.g. repayment of a 6-month loan postponed by 6 months), all other current loans must also benefit from a deferral for the same period of at least 6 months (e.g. a 5-year investment loan must also benefit from a deferral of at least 6 months). 

If there are other current loans covered by the State guarantee, the proportional payment deferral has no impact on the maintenance of the State guarantee.

 For example, for a loan granted under the first guarantee scheme with a contractual term of 12 months, a payment deferral of 6 months is granted.  Suppose that the same borrower also has a current loan with a contractual term of 36 months covered by the second guarantee scheme.  By granting a 6-month deferral of payments on the guaranteed loan under the first guarantee scheme, the loan covered by the second guarantee scheme must also benefit from a 6-month payment deferral (in accordance with the principle of proportionality), thereby exceeding the initial repayment period of 36 months. However, this extension of the repayment period pursuant to a forbearance measure for a loan covered by the State guarantee under the first guarantee scheme does not result in the loss of the State guarantee for the loan covered by the second guarantee scheme.

The bank will first have to "enforce" the customer (i.e. draw on all of the customer's funds, collateral, guarantees, etc.) before the residual amount can be considered as a loss for calculating the State guarantee. This enforcement does not have to occur or be finalised at the moment that the State guarantee is called on.