Debt moratorium
Considering the state of emergency, the Hungarian National Bank (MNB) has requested the banks already on the 16th of March 2020 to apply a special case moratorium on repayment of corporate cases and called on the government to order a moratorium on repayment of corporate loans.
Due to the emergency, the Government has suspended repayment obligations of capital, interest, and additional payment obligations of loans, borrowings, credit agreements and leases concluded before the 18th of March 2020 up to the date of 31th of December 2020 both in cases of individuals and companies. There is to be mentioned, that the original term of the respective credit agreement will be extended with the duration of the debt moratorium period. Certainly, the debtor retains the right to continue repaying during the debt moratorium period.
Lending - banking sector
Debt moratorium
With respect to the credit moratorium announced, the Decree provides that the outstanding debt can be neither during the debt moratorium nor afterwards increased by interest. The interest, which is not paid during the moratorium, shall be payable in equal annual instalments after the term of the moratorium, together with any instalments otherwise due.
Growth Loan Program
With respect to the Growth Loan Program (NHP), the Hungarian National Bank (MNB) has decided to announce a moratorium on repayment of loans under the respective program already on 18 March 2020, allowing the banks to restructure NHP loans granted to small and medium-sized enterprises by way of rescheduling repayments.
Preferential loan facilities
There are several preferential financing facilities both for SMEs and for large enterprises.
In the new phase of the Funding of Growth Scheme (FGS Go!) SMEs can receive loans from HUF 1 million to 20 billion (approx. EUR 2.8-56 million) with a maximum fixed interest rate of 2.5% and with wide utilization opportunities (debt restructuring is also possible). Investment credits for the acquisition of tangible assets, intangibles, companies established before 1 January 2020 etc. may be granted with a maturity of 20 years and may be called up over a period of 3 years. Working capital loans with a maturity of up to 3 years may be utilized for receivables, inventories, wages or even the refinancing of EU subsidies.
Other state-subsidized loans are available for SMEs and large companies too. In this scheme, the government involves financial institutions (in particular the MFB, Hungarian Development Bank) to provide loans for various utilization purposes (investment, working capital loans, liquidity facilities) with decreased interest rates. State guarantees will also be provided to these loans and to already existing loan facilities. The debt may be covered up to 80%-90% with a guarantee fee of 0.2%-0.3%, which highly decreases the need to provide collateral by the debtors.
Lease contracts
For the specific sectors referred in the chapter Tax Measures, the lease contracts cannot be terminated or the lease fee cannot be increased until the 30th of June 2020, even if otherwise permitted by the contract.
Paypass limitation
As from 15 April 2020 at the latest, the value limit of contactless payments, which do not require a PIN (PayPass), has been increased to HUF 15,000 (approx. EUR 40) from HUF 5,000 (approx. EUR 14).
Violations and Sanctions
According to the Government Decree, a violation occurs for instance by staying on the territory of a grocery store or other store at an unauthorized time or in an unauthorized manner. The penalty of such an event is a fine of between HUF 5,000 and 500,000 (approx. EUR 14-1,420).
State aids
The state aid opportunities introduced this week in line with the announcement of the European Commission. Competitiveness aid is eligible to medium-sized and large enterprises established in Hungary, mainly in the manufacturing or the service sector. Several sectors (e.g. steel sector, commercial and export related activities etc.) are excluded from the scope; however, the related NACE codes have not been clarified yet. Among others, the subsidy is subject to the following requirements:
Considering the state of emergency, the Hungarian National Bank (MNB) has requested the banks already on the 16th of March 2020 to apply a special case moratorium on repayment of corporate cases and called on the government to order a moratorium on repayment of corporate loans.
Due to the emergency, the Government has suspended repayment obligations of capital, interest, and additional payment obligations of loans, borrowings, credit agreements and leases concluded before the 18th of March 2020 up to the date of 31th of December 2020 both in cases of individuals and companies. There is to be mentioned, that the original term of the respective credit agreement will be extended with the duration of the debt moratorium period. Certainly, the debtor retains the right to continue repaying during the debt moratorium period.
Lending - banking sector
Debt moratorium
With respect to the credit moratorium announced, the Decree provides that the outstanding debt can be neither during the debt moratorium nor afterwards increased by interest. The interest, which is not paid during the moratorium, shall be payable in equal annual instalments after the term of the moratorium, together with any instalments otherwise due.
Growth Loan Program
With respect to the Growth Loan Program (NHP), the Hungarian National Bank (MNB) has decided to announce a moratorium on repayment of loans under the respective program already on 18 March 2020, allowing the banks to restructure NHP loans granted to small and medium-sized enterprises by way of rescheduling repayments.
Preferential loan facilities
There are several preferential financing facilities both for SMEs and for large enterprises.
In the new phase of the Funding of Growth Scheme (FGS Go!) SMEs can receive loans from HUF 1 million to 20 billion (approx. EUR 2.8-56 million) with a maximum fixed interest rate of 2.5% and with wide utilization opportunities (debt restructuring is also possible). Investment credits for the acquisition of tangible assets, intangibles, companies established before 1 January 2020 etc. may be granted with a maturity of 20 years and may be called up over a period of 3 years. Working capital loans with a maturity of up to 3 years may be utilized for receivables, inventories, wages or even the refinancing of EU subsidies.
Other state-subsidized loans are available for SMEs and large companies too. In this scheme, the government involves financial institutions (in particular the MFB, Hungarian Development Bank) to provide loans for various utilization purposes (investment, working capital loans, liquidity facilities) with decreased interest rates. State guarantees will also be provided to these loans and to already existing loan facilities. The debt may be covered up to 80%-90% with a guarantee fee of 0.2%-0.3%, which highly decreases the need to provide collateral by the debtors.
Lease contracts
For the specific sectors referred in the chapter Tax Measures, the lease contracts cannot be terminated or the lease fee cannot be increased until the 30th of June 2020, even if otherwise permitted by the contract.
Paypass limitation
As from 15 April 2020 at the latest, the value limit of contactless payments, which do not require a PIN (PayPass), has been increased to HUF 15,000 (approx. EUR 40) from HUF 5,000 (approx. EUR 14).
Violations and Sanctions
According to the Government Decree, a violation occurs for instance by staying on the territory of a grocery store or other store at an unauthorized time or in an unauthorized manner. The penalty of such an event is a fine of between HUF 5,000 and 500,000 (approx. EUR 14-1,420).
State aids
The state aid opportunities introduced this week in line with the announcement of the European Commission. Competitiveness aid is eligible to medium-sized and large enterprises established in Hungary, mainly in the manufacturing or the service sector. Several sectors (e.g. steel sector, commercial and export related activities etc.) are excluded from the scope; however, the related NACE codes have not been clarified yet. Among others, the subsidy is subject to the following requirements:
- the company was not in difficulties on 31 December 2019;
- it proves to have experienced a decline in sales revenue or orders in connection with the COVID-19 pandemic of at least 25%;
- the company is under obligation to make domestic investments of at least EUR 150,000 until 30 June 2021;
- it must commit to the maintenance of jobs during the investment and in any case, until 31 December 2020;
- the applicant has no insurance or it cannot cover the damages caused by the Coronavirus crisis; and
- the company has no public debts and has settled employment relations.
The subsidy shall be, following the application, granted in advance. Incentive deeds can be issued until 31 December 2020 at the latest. The budget is capped at HUF 50 billion of which a corporate group may receive an amount of up to EUR 800,000, together with domestic affiliated companies. The amount of the aid is linked to the investment volume:
- 30% for investments of EUR 150,000 to EUR 300,000;
- 40% for investments of EUR 300,001 to EUR 500,000; and
- 50% for investment exceeding EUR 500,000.
LeitnerLeitner
Address: 1027 BUDAPEST, Kapás utca 6-12.
Telephone: +36 1 279 2930
Fax: +36 1 209 4874
Email: office@leitnerleitner.hu
Web: http://www.leitnerleitner.hu/
