In the recent period, several new government decrees and government decisions have been made under the Economic Action Plan (Gazdaságvédelmi Akcióterv) with the aim of mitigating the economic impact of the coronavirus pandemic. In this post, we present these measures and discuss the new detailed rules for the calculation and publication of the Annual Percentage Rate of Charge (APR). First, we summarize the loan schemes of the Széchenyi Card Program, which serves the micro, small and medium-sized enterprises, and the loan and guarantee schemes related to the agricultural economy.

Széchenyi Card Program

From 15 May 2020, the Széchenyi Card Overdraft Plus (Széchenyi Kártya Folyószámlahitel Plusz), the Széchenyi Job Retention Loan (Széchenyi Munkahelymegtartó Hitel), the Széchenyi Liquidity Loan (Széchenyi Likviditási Hitel) and the Széchenyi Investment Loan Plus (Széchenyi Beruházási Hitel Plusz) will be launched within the framework of the Széchenyi Card Program. The target group of these constructions is micro, small and medium-sized companies. The net transaction interest rate to be paid by enterprises for each loan is capped at a favorable, low level.

The interests and subsidies related to the constructions are summarized in the following table:

	Transaction interest paid by enterprises	Interest subsidy on outstanding principal debt	Administration fee subsidy
Széchenyi Card Overdraft Plus	0.1%	2.4 percentage point	0.5 percentage point
Széchenyi Job Retention Loan	0.1%	2.4 percentage point	0.5 percentage point
Széchenyi Liquidity Loan	0.2%	2.3 percentage point	0.5 percentage point
Széchenyi Investment Loan Plus	0.5%	4.0 percentage point	0.5 percentage point

 

In addition, a 1% guarantee fee subsidy will be provided for the counter-guarantee fee for loans.

Detailed conditions for the constructions are still being developed, but based on the currently known information:

• The maximum loan amount of the Overdraft Plus product is HUF 100 million;
• The maximum amount of the Job Retention Loan is HUF 750 million, while its term is 2 years;
• The Liquidity Loan has a maximum of HUF 250 million and a term of up to 3 years;
• Investment Loan Plus has a maximum of HUF 1,000 million and a term of up to 10 years.

Together with the introduction of the new products, the distribution of the “older” products – Széchenyi Card Overdraft, the Széchenyi Working Capital Loan and the Széchenyi Investment Loan – will be suspended from 15 May 2020, except for the loan applications of the Széchenyi Card Overdraft affected by extension and review.

Credit and guarantee schemes related to the agricultural economy

According to Resolution 1195/2020. (IV. 30.) of the Government, it supports the introduction of the new crisis guarantee product of the Agricultural Enterprise Loan Guarantee Foundation (Agrár-Vállalkozási Hitelgarancia Alapítvány) and increases the guarantee fee subsidy for loans generated by the Foundation and provides additional resources related to the Agricultural Széchenyi Card Overdraft (Agrár Széchenyi Kártya Folyószámlahitel). In addition, the Ministry of Agriculture provides an interest rate subsidy of 100% for the entire term of the loan for loans taken out by enterprises under the MFB Agricultural Working Capital Loan Program 2020 (MFB Agrár Forgóeszköz Hitelprogram 2020), the MFB TÉSZ Working Capital Loan Program 2020 (MFB TÉSZ Forgóeszköz Hitelprogram 2020), the MFB Food Working Capital Loan Program 2020 (MFB Élelmiszeripari Forgóeszköz Hitelprogram 2020), a 100% counter-guarantee fee subsidy for the entire guarantee period, and a 100% cost subsidy for the costs specified in the Decree of the Minister of Agriculture on concluding and maintaining loans.

Government Decision 1196/2020, which provides for the provision of additional resources, is also included in the list of measures affecting agriculture. According to this, it prescribes the availability of HUF 24 billion for the benefit of the National Agricultural Subsidies article, and also sets the amount to be spent on the support of TÉSZ at HUF 1 billion.

The calculation and publication of the APR

Decree 178/2020 (V. 4.) will enter into force in the next few days, focusing on the Annual Percentage Rate of Charge. According to the detailed rules on the payment moratorium, the rate of all fees payable in connection with credit agreements until 31 December 2020 must be taken into account when calculating the APR, which is called preferential APR. However, it is important to note that in addition to the calculation of the preferential APR, the APR calculated in accordance with the general (non-preferential) terms should also be published. The preferential APR shall be indicated in the commercial communications for the loans in accordance with the general legal provisions on the indication of the APR and the installments.

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To mitigate the economic impact of COVID-19, several public funding programs have already been announced, which we have previously covered in our blog posts (for example MFB and Garantiqa loan and guarantee products and the MNB’s NHP Hajrá and NKP loan programme, the detailed rules for the NHP Hajrá are available here). From the various available constructions, it will be worthwhile for economic operators to analyze which form of financing will best help to mitigate the negative effects of COVID-19 on their business and to redesign their economic operation, based on the impact of their economic activity. If any questions arise, please feel free to contact us.