The two new government decisions (1170/2020 and 1171/2020), which can be read in the Hungarian Official Gazette No 82 of 20 April 2020, summarize the measures related to guarantee and loan constructions to be implemented in order to reduce the economic impact of COVID-19 on enterprises.

Government decision 1170/2020. (IV. 21.), in order to alleviate the liquidity difficulties of domestic companies and to implement their investments, agrees to start the MFB Vis Maior Guarantee Program by providing a 90% irrevocable state counter-guarantee and indemnity. The fee to be paid by MFB for the state counter-guarantee is 0.1% / year of 90% of the guarantee amount, which takes effect immediately.

To summarize, the terms and conditions of the MFB Vis Maior Guarantee Program are as follows:

• customer base: small and medium-sized enterprises and large companies,
• the amount of the acceptable state counter-guarantee and indemnity is 90% of the amount of the guarantee,
• the subsidized loan purpose of the state counter-guarantee and indemnity undertaking: working capital, investment,
• the maturity is 6 years,
• the available budget is HUF 50 billion,
• the rate of the guarantee is 90% of the loan principal,
• the maximum amount of the loan is HUF 10 billion.

The Government also supports the possibility of increasing the stock of the full payment guarantee provided by Garantiqa with a state indemnity as of 31 December 2020 to HUF 1,000 billion. Under a restrictive condition, in addition to this counter-guarantee, the decision provides the Garantiqa Crisis Program with an additional guarantee amount of HUF 500 billion. The regulatory and institutional framework for providing 1% guarantee fee support for large companies is to be developed by the Minister of Innovation and Technology. In addition, the Government provides support for the products of the Széchenyi Card construction in the framework of the Garantiqa Crisis Guarantee Program, amounting to 1% of the counter-guarantee fee.

1170/2020. (IV. 21.) provides for the measures necessary to increase the additional financing of the institutional guarantee scheme in order to support the lending of SMEs.

In addition, it provides guarantee fee support for new loans and loan replacement loans issued between 21 April 2020 and 31 December 2020 and with a maturity of up to 6 years, subject to certain restrictions and other conditions.

In the government decision 1171/2020. (IV. 21.) the Hungarian Government agrees with the announcement of the HUF 180 billion MFB Crisis Loan Program and the HUF 150 billion MFB Competitiveness Loan Program.

The terms and conditions of the Crisis Loan are as follows:

• the subsidy of the interest rate  is 1.58 percentage points from 1 January 2022,
• customer base: micro, small and medium-sized enterprises,
• the amount of the acceptable state counter-guarantee and indemnity is 80% of the amount of the loan principal, the fee for which is a maximum of 0.1% / year,
• the subsidized loan purpose of the state counter-guarantee and indemnity undertaking: working capital, investment, operation, credit activity,
• the maximum maturities of working capital, liquidity and investment loans by order of succession, are 3, 3 and 10 years,
• the available budget is HUF 180 billion,
• the guarantee rate is 80% of the loan principal,
• the loan amount may not exceed HUF 150 million.

Terms and Conditions of the Competitiveness Loan:

• customer base: small and medium-sized enterprises and large companies,
• the amount of the acceptable state counter-guarantee and indemnity is 80% of the amount of the loan principal, the fee for which is a maximum of 0.1% / year,
• the subsidized loan purpose of the state counter-guarantee and indemnity undertaking: working capital, investment, acquisition, operation, credit activity,
• the maximum maturity for working capital loans is 5 years, for investment, acquisition and loan replacement loan is 15 years,
• the available budget is HUF 150 billion,
• the guarantee rate is 80% of the loan principal,
• the minimum loan amount is HUF 1 billion, the maximum is HUF 10 billion / transaction.

The decision does not include the amount of interest, only the amount of the interest subsidy, the detailed rules will presumably be specified later.

In order to mitigate the economic effects of COVID-19, several public funding programs have been announced (in addition to those listed above, e.g. MNB's NHP Hajrá loan program). It will be worthwhile for economic operators to analyze which form of financing will best help to mitigate the negative effects and economic redesign of COVID-19 on their business, based on the impact of their economic activity.