Finance Minister Blümel: deferral of loan repayments for private individuals and micro-enterprises extended by four months
– more than €4 billion already deferred
In April 2020, the Federal Government introduced a statutory credit moratorium. This gives consumers and micro-entrepreneurs the opportunity to defer their repayments and interest / redemption payments without suffering any legal consequences. Last Friday, the application period was extended by four months, until 31 October 2020, by means of a special motion.
Finance Minister Gernot Blümel: “The extension of the credit moratorium is an important step towards further relieving the burden, while boosting the liquidity of borrowers who need extra protection. Anyone who has got into economic difficulties as a result of the coronavirus crisis should not have to worry about looming loan repayments”.
The credit moratorium has already provided massive relief for private individuals and micro-enterprises: so far, 103,636 legal deferrals totalling €4.08 billion have been approved.
Private individuals and businesses with fewer than ten employees and an annual turnover or balance sheet of up to €2 million, who are currently unable to meet their repayment obligations due to the effects of the COVID-19 crisis, will benefit from the credit moratorium. The extension means that if a lender’s demands for either repayment, interest or redemption would normally have been due by 30 June 2020, it will now not be due until 31 October 2020. The statutory credit moratorium provides for a three-month deferral of all credit claims against consumers and micro-enterprises (for contracts concluded before 15 March 2020). Before today’s extension, the claims in question were due between 1 April and 30 June 2020. A further provision for the credit moratorium is that borrowers cannot reasonably be expected to make payments where they have experienced COVID-19-related loss of income and economic distress that amounts to a threat to their livelihood. Where borrowers have initially continued paying their instalments, they can still trigger a deferral at a later date. The statutory credit moratorium was introduced to comply with European regulatory standards, to avoid adverse effects for deferring credit institutions (in particular to avoid NPL status by deferring loan payment obligations) and to create legal certainty.
The most important figures and data at a glance:
- Number of statutory deferrals: 103,636 – by mid-April, 25,000 loans were deferred.
- Total volume of statutory deferrals: £4.08 billion
- Total allocated: total lending volume: €26.59 billion – as of mid-April, the figure was €12 billion.
Blümel: “We have set up a variety of instruments to make it easier for businesses to obtain loans. We’ve used the regulatory margins as much as possible to give businesses more liquidity. As a result of these measures, bank lending has recently significantly increased. We are particularly pleased with the increase of 100% state-backed loans, where costs for entrepreneurs have been reduced to a minimum.” The 100% state-backed loans approved so far amount to more than €900 million. As a rule, this also corresponds to businesses’ associated loan amounts. The interest rate for these loans is fixed at 0% for the first two years and repayment does not start until 1 January 2021. We are one of only four EU member states to provide 100% guarantees. In Germany, which is ten times larger, around 9,000 100%-backed applications have been approved; in Austria it’s around 7,000.