Scope

4.1 Who is this second guarantee scheme aimed at?

All small or medium-sized non-financial enterprises (including unincorporated self-employed persons, see questions 4.2-4.3 for definition), with the exception of:

  • companies which are subject to collective insolvency proceedings;
  • companies which have received rescue aid that has not been repaid;
  • companies which have received restructuring aid and are still subject to a restructuring plan;
  • medium-sized enterprises according to the EU definition (see question 4.2) that were considered undertakings in difficulty within the meaning of Article 2(18) of Regulation (EU) No 651/2014 as of 31 December 2019;
  • family estate companies;
  • management companies;
  • public entities (see question 4.3);
  • financial counterparties (see question 4.3);
  • (natural or legal) persons granting exclusively or in principal loans for their own account as part of their usual commercial or professional activities;
  • (natural or legal) persons who directly or indirectly exercise control over an entity referred to under (viii) and (ix).

Where a loan is granted to a company that does not meet the above requirements regarding the scope of the second guarantee scheme and thus is not eligible for the new scheme, or where the principal of the loan exceeds legal limits, this constitutes unlawful aid to the borrower. The State guarantee is a support for the borrower who, because of that guarantee, is able to obtain a loan that otherwise would not be granted, moreover on terms that would have been less attractive without the guarantee. The unlawful aid concerned will be recovered from the borrower by the State.

Under certain circumstances, there may also be grounds for the State to question the validity of the State guarantee with regard to the credit institution. This will particularly be the case in the event of negligence on the part of the relevant credit institution in granting a loan which is subsequently proven to constitute unlawful State aid to the borrower.

Negligence on the part of the lender will not be suspected and will have to be demonstrated by the State on the basis of the concrete elements of a dossier. There is no negligence if the credit institution, in granting guaranteed loans, exercises the normal prudence of a professional banker and verifies the elements that are usually verified by the lender in banking practice. In this respect, a lender may, where appropriate, also obtain sworn declarations from the borrower regarding elements that cannot reasonably be verified independently by the lender.

Regarding the question of whether the borrower is subject to collective insolvency proceedings, the normal prudence of the lender implies an online search through RegSol (the database of insolvency proceedings).

Rescue or restructuring aid is limited to aid measures in favour of firms in difficulty as defined in the Guidelines on State aid for rescuing and restructuring non-financial undertakings in difficulty issued by the European Commission, OJ C 249, 31.7.2014, p. 1. The following link allows the search for rescue and restructuring aid to Belgian companies:

https://ec.europa.eu/competition/elojade/isef/index.cfm?clear=1&policy_area_id=3

You must indicate at "Member State" Belgium together with:

at “Primary Objective (Main)”:

  • Rescuing firms in difficulty
  • Rescuing undertakings in difficulty
  • Restructuring firms in difficulty
  • Restructuring undertakings in difficulty

at “EU Secondary legal basis”:

  • Rescue and restructuring-Rescue and Restructuring Guidelines, 1999
  • Rescue and Restructuring-Rescue and Restructuring Guidelines, 2004-2012
  • Rescue and Restructuring-Rescue and Restructuring Guidelines, 2014-2020

Whether a company is subject to collective insolvency proceedings or whether it has received rescue and/or restructuring aid should be verified at group level at the moment the loan is granted. For the assessment of these criteria, the lender may rely on a sworn declaration provided by the borrower (see question 4.1/2). In this respect, the lender is expected to exercise the normal prudence of a professional banker and, among other things, subject the information and sworn declarations provided by the borrowers to a marginal review. If this is not the case at group level but one of the entities of the group to which the applicant belongs is in this situation, the loan agreement should include a clause prohibiting the borrower from using the funds of the agreement for the (direct or indirect) financing of the entity in this situation.

It is not always possible for the lender to check the information gathered about the group context and the situation of group members in a simple and independent way. 

To prove their status, SMEs themselves are also allowed to make use of declarations made in good faith when they are unable to establish all the information precisely, as stated, inter alia, in Article 3(5) of Annex 1 (SME definition) of the General Block Exemption Regulation (651/2014) of 17 June 2014.[1]    

When assessing the exclusion criteria at group level, the creditor may also, where appropriate, obtain declarations on honour from the borrower regarding those elements which cannot reasonably be independently investigated by the creditor.

Moreover, it is recalled that, although in principle this check takes place at the (individual) level of the borrower, the borrower is obviously not allowed to transfer the borrowed funds to another company within the group that would be subject to collective insolvency proceedings.  Such conduct would constitute an abuse of law and run counter to the borrower’s obligation not to claim the guaranteed loan while he knows or ought to know that he is not complying with the conditions.

This reasoning also applies to groups that include financial businesses, foreign activities (which do not meet the conditions) and/or family estate or management companies. For the latter, this only applies on the condition that the activities involved (management or family estate management) are limited to one or more companies (and hence do not represent the activity of the group as a whole).

 

[1] See inter alia Article 3(5) of Annex 1 (SME definition) of the Block Exemption Regulation (651/2014) of 17 June 2014: 5. Enterprises may make a declaration of status as an autonomous enterprise, partner enterprise or linked enterprise, including the data regarding the thresholds set out in Article 2.  The declaration may be made even if the capital is spread in such a way that it is not possible to determine exactly by whom it is held, in which case the enterprise may declare in good faith that it can legitimately presume that it is not owned as to 25 % or more by one enterprise or jointly by enterprises linked to one another. Such declarations are made without prejudice to the checks and investigations provided for by national or Union rules.

4.2 What is meant by small or medium-sized enterprises?

These are “micro-enterprises”, “small enterprises” or “medium-sized enterprises” according to the EU definition:

  • “micro-enterprises”: enterprises which employ fewer than 10 persons and which have an annual turnover or annual balance sheet total not exceeding € 2 million;
  • “small enterprises”: enterprises which employ fewer than 50 persons and which have an annual turnover or annual balance sheet total not exceeding € 10 million;
  • “medium-sized enterprises”: enterprises which employ fewer than 250 persons and which have an annual turnover not exceeding € 50 million and/or an annual balance sheet total not exceeding € 43 million, but which (i) employ at least 50 persons or (ii) have an annual turnover or annual balance sheet total exceeding € 10 million.

4.3 What is meant by “non-financial businesses”?

A non-financial business is an undertaking which does not fall within one of the following categories: (i) a financial counterparty within the meaning of Article 3 point (3) of EU Regulation 2015/2365, a payment institution or electronic money institution or a special purpose securitisation vehicle﷟, (ii) a natural person, legal person or group of such persons granting exclusively or in principal loans for their own account as part of their usual commercial or professional activities, or (iii) a natural person, legal person or group of such persons exercising direct control over an entity as referred to under (i) and (ii).

Although the scheme is aimed at a wider public, it is clarified that the following sectors/activities also qualify, insofar as they do not fall under the exception (see question 4.1):

  • Non-profit organisations, both social enterprises and others, including hospitals
  • Non-financial institutions having a public shareholdership
  • Banking and insurance intermediaries (agents and brokers)
  • Regulated real estate companies
  • Holding companies whose main activity consists in holding shares in NFCs

Conversely, counterparties connected with government (e.g. PSEs, associations of local authorities, public social assistance centres, etc.) are excluded insofar as they are designated as S13 in column D of the list of public units published by the National Accounts Institute.

4.4 Does the scheme apply to foreign businesses?

The scheme is only available to Belgian residents. Belgian residents could be both undertakings incorporated under Belgian law and branches with a permanent establishment in Belgium. Legal provisions have been introduced to ensure that the guaranteed loans are used for the benefit of the undertakings’ Belgian activities and that the loans are not in a large part used for the financing of the foreign activities of the borrower (the loan contract has to exclude such use or limit it to 10% of the guaranteed loan; losses on guaranteed loans which do not exclude such use are not compensated). A provision has also been inserted to ensure that in such case local facilities for financing, whether or not under local guarantee schemes, are being exhausted for these foreign activities.

4.5 Does the second guarantee scheme also apply to loans granted to companies established in Belgium whose core business is conducting trading activities aimed at exporting and importing goods to or from abroad?

Yes, the guarantee scheme applies to such loans. In other words, such business is regarded as activities conducted in Belgium and not as 'qualifying foreign activities', the financing of which can only be covered by the guarantee scheme under strict conditions and restrictions.