To increase the ratio of fixed-interest loans the Hungarian National Bank has relaunched the Growth Credit Program Fix (GCP).
Although the market expected the GCP in autumn 2018, the Hungarian National Bank published its product introduction on the relaunch of the GCP including the detailed terms of the programme. Thus companies are expected to start using the opportunities offered by the programme ‒ effective as of 1st January 2019 ‒ only in mid or late January 2019.
The GCP budget amounts to HUF 1 000 billion, to be provided by the national bank to credit institutions in the form of refinancing credits at 0% interest and maximum maturity of 10 years.
The basic terms of the GCP are the following:
- Who is entitled to apply?:
The credit can be utilized only by SMEs as defined by law; however the Hungarian National Bank did not set out any other requirement in this respect.
Refinancing credits can be utilized from 3rd January 2019. The final deadline for utilizing the loan is 2 years calculated from the date of concluding the relevant credit facility agreement, provided that first use of the loan must be within 1 year calculated from conclusion of the agreement.
- Purpose of the credit:
The GCP can be used only for new investment credit. New investments include inter alia everything that supports the business activity of an SME. A loan previously utilized by an SME cannot be refinanced from the investment credit, except if the loan was utilized under the current GCP.
- Interest rate of SME loan:
A fixed rate not exceeding 2.5% a year. Credit institutions cannot charge additional interest, costs, fees, or commissions in connection with an investment credit.
- The amount of SME investment credit:
The minimum amount of the credit is HUF 3 million while the maximal amount is HUF 1 billion.
Maturity is a minimum of 3 years calculated from conclusion of the investment credit facility agreement but a maximum of 10 years calculated from first disbursement under the related refinancing loan.
The collateral structure does not alter from the usual one: credit institutions and financial institutions may require collateral from SMEs based on the law applicable to their activity and their business policy.
Based on the preliminary expectation of experts the budget will be exhausted within 2 years and will likely be enough to cover the financial needs of every firm from various sectors.