The Official Journal of the European Union published on January, 22nd 2009, the Communication from the Commission related to the “Temporary Community framework for State aid measures to support access to finance in the current financial and economic crisis”, which establishes some additional measures which Member States may implement in order to reduce the difficulties faced by companies to access financial instruments and to support investment in certain areas.

On November, 26th 2008, the Commission adopted the Communication “A European  Economic Recovery Plan” to drive Europe's recovery from the current financial crisis. In this context, the challenge for the Community is avoiding public intervention which would undermine the objective of less and better targeted State aid. Nevertheless, under certain conditions, there is a need for new temporary State aid. The Communication, therefore, describes a set of possible additional aid measures for the grating of temporary aid by Member States.

The temporary additional measures provided for in this Communication pursue two objectives:

1. To unblock bank lending to companies and thereby guarantee continuity in their access to finance. As borne out by the recently adopted Communication “Think Small First’ — A ‘Small Business Act’ for Europe”, SMEs are particularly important for the whole economy in Europe and improving their financial situation will also have positive effects for large companies, thereby supporting overall economic growth and modernisation in the longer term.
2. Encourage companies to continue investing in the future, in particular in a sustainable growth economy.

The temporary aid measures foreseen by this Communication may not be cumulated with aid falling within the scope of the de minimis Regulation for the same eligible costs.

The Commission applies this Communication from December, 17th 2008, the date on which it agreed in principle its content, having regard to the financial and economic context which required immediate action. This Communication is justified by the current exceptional and transitory financing problems related to the banking crisis and will not be applied after December 31st, 2010.

PROPOSED AID INSTRUMENTS

General Economic Policy Measures

To achieve the objectives of the Recovery Plan, Member States already have at their disposal a number of instruments which are not considered State aid. Member States may adopt a series of general policy measures, applicable to all companies on their territories and, consequently, falling outside the State aid rules, with the aim of temporarily alleviating financing problems in the short and medium term.

Member States may also grant financial support directly to consumers, for instance for scrapping old products and/or buying green products. If such aid is granted without discrimination based on the origin of the product, it does not constitute State aid.

State Aid Possible Under Existing Instruments

State aid rules have been greatly simplified and streamlined by the Commission declaring certain categories of aid compatible with the common market. Of particular importance is Commission Regulation (EC) Nº 1998/2006 of December, 15th 2006 on the application of Articles 87 and 88 of the Treaty to de minimis aid, which specifies that support measures worth up to 200,000 € per company over any three-year period do not constitute State aid within the meaning of the Treaty. The same Regulation also states that guarantees of up to EUR 1,5 million do not exceed the de minimis threshold and therefore do not constitute aid.

Compatible Limited Amount of Aid

The financial crisis is affecting not only structurally weak companies but also companies which will find themselves facing a sudden shortage or even unavailability of credit. Therefore, in view of the current economic situation, it is considered necessary to temporarily allow the granting of a limited amount of aid which will be considered compatible with the common market provided that they do not exceed a cash grant of 500,000 € per undertaking, among other aspects.

Aid in the Form of Guarantees

In order further to encourage access to finance and to reduce the current high risk aversion on the part of banks, subsidised loan guarantees for a limited period can be an appropriate and well targeted solution to give firms easier access to finance.

Among other requirements the guarantees will be considered compatible if they are granted until December,31st 2010 at the latest, and they do not exceed 90 % of the loan.

Aid in the Form of Subsidised Interest Rate

The Commission will accept that public or private loans are granted at an interest rate which is at least equal to the central bank overnight rate plus a premium equal to the difference between the average one year interbank rate and the average of the central bank overnight rate over the period from January, 1st 2007 to June, 30th 2008, plus the credit risk premium corresponding to the risk profile of the recipient, as stipulated by the Commission Communication on the revision of the method for setting the reference and discount rates. The reduced interest rates may be applied for interest payments before 31 December 2012.

Aid for the Production of Green Products

Additional measures in the form of subsidised loans could encourage production of ‘green products’. However, subsidised loans may cause serious distortions of competition and should be strictly limited to specific situations and targeted investment.

The Commission considers that, for a limited period, Member States should be given the possibility of granting aid in the form of an interest-rate reduction. The company may benefit from an interest-rate reduction of 25 % for large companies, and 50 % for SMEs.

Risk Capital Measures

It is considered appropriate to temporarily raise the safe-harbour threshold for risk capital investments to meet the increased equity gap and to temporarily lower the percentage of minimum private investor participation to 30 % also in the case of measures targeting SMEs in non-assisted areas.

Short-term Export Credit Insurance

The Commission considers that, as a consequence of the current financial crisis, a lack of insurance or reinsurance capacity does not exist in every Member State, but it cannot be excluded that, in certain countries cover for marketable risks could be temporarily unavailable.

In this context, in order to speed up the procedure for Member States, the Commission considers that, until December, 31st 2010, Member States may demonstrate the lack of market by providing sufficient evidence of the unavailability of cover for the risk in the private insurance market.