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How the Norwegian state-backed loan and guarantee programme for enterprises works

How the Norwegian state-backed loan and guarantee programme for enterprises works

The Storting, the Norwegian parliament, has adopted a new act on a state-backed loan and guarantee programme for businesses ranging from small and medium-sized to large enterprises. The act came into force in late March 2020.

Loans under the programme can be granted up to 1 June 2020, but this deadline may be extended.

Who is eligible?

Loans can be granted to Norwegian businesses ranging from small and medium-sized to large enterprises, both new and existing Nordea customers.

Small and medium sized companies are defined as having:

  • less than 250 employees
  • maximum revenues of EUR50m or a balance sheet total of a maximum of  EUR43m

Larger enterprises are defined as those with more than 250 employees, and can borrow up to NOK 150M. They also have to prove that they have not been in financial difficulties per 31 December 2019, or have had loan applications recently rejected.

The finance ministry has announced that the criteria may be determined on a more discretionary basis to avoid unintentional limitations, but this has still to be decided.

A precondition is that the enterprises are in urgent need of cash as a result of the COVID-19 outbreak. Furthermore, the loans can only be granted to enterprises which are expected to be profitable under normal market conditions – that is, when the effects of the crisis have worn off.

How much can each business borrow?

A business can borrow a maximum of two times its salary costs in 2019 or 25% of its revenues in 2019.

For enterprises established after 1 January 2019, the estimated salary costs in the first two years of operations will apply.

In special cases the loan may if necessary exceed these limits to cover the cash requirement of the business over the next 18 months. This must be documented by means of a cash budget.

Will there be changes to the programme?

Many of the programme details will be determined by the finance ministry through further regulation. Therefore, adjustments or changes may be made at short notice.

What can the loan be used for and which criteria apply?

  • Existing loans cannot be refinanced or repaid.
  • The maximum term of the loan is three years.
  • Borrowers pay a guarantee commission to the state. The commission is estimated at 0.5% of the loan amount, but this has not been finally decided yet.

For more information about the state-backed loan package please contact your Nordea advisor, or visit nordea.no for an application form to send off on behalf of your business.

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