KredEx Foundation has received 78 loan applications from companies seeking help during the coronavirus crisis for extraordinary working and investment loans totalling €192.8 million, the lion's share of which is Tallink's €150 million application. However, it will take time for banks to implement new crisis measures.
KredEx is a foundation set up by the Ministry of Economic Affairs and Communications in 2001 with the aim of providing financial solutions. They are assisting the government with the implementation of it's €2 billion package of economic measures which will help businesses survive the crisis.
So far, since the end of March, Kredex has received 19 applications totalling €43.2 million, of which KredEx's surety amount is €23.2 million, for businesses in need of financial assistance during the economic crisis caused by the impact of the coronavirus.
Additionally, KredEx has also received information from banks for 10 extraordinary surety agreements totaling €2.8 million.
The largest application submitted is shipping company Tallink's application for €150 million. The government must make decisions on whether or not to assist an application of more than €20 million.
The aim of the crisis measures is to stop companies from going bankrupt and making redundancies.
Joonas Kerge, Communications Manager at Kredex, said: "The measures cover the liquidity needs of most Estonian companies, but, of course, not the needs of absolutely everyone, because the loan is an obligation that must be repaid at some point."
At the end of March, Kredex, in cooperation with banks, started issuing extraordinary guarantees to secure new and existing loans.
"Banks will have some time to get acquainted with the terms of new services, so we ask entrepreneurs to have an understanding attitude when communicating with banks," Kerge said.
He added that Kredex is constantly cooperating with banks, however, it is natural that the situation is difficult for all market participants. "That's why we also ask entrepreneurs to have an understanding attitude so that banks can get acquainted with the terms and conditions of existing and new services.
"With regard to issuing guarantees, we have given banks greater powers to make guarantee decisions than before, which will undoubtedly make the process more convenient and faster for the company," he added.
Liisi Himma, head of corporate banking at Swedbank, said the bank has not yet provided a guarantee from Kredex to its customers and so far all transactions have been resolved without the foundation.
"We will probably need Kredex's guarantee in the future if our customers' difficulties worsen and they need to borrow more money," she said.
SEB Pank said Kredex guarantees have already been requested from the bank and the first guarantees are also in the process of formalization.
Artjom Sokolov, SEB's head of corporate banking said: "At the same time, there are a number of economic sectors and other restrictions in the guarantee program where we will have to take a possible payment holiday without Kredex support. We are communicating with Kredex and provide periodic feedback on current guarantee conditions."
Sokolov said, currently, the situation has calmed down. However, if the economic crisis lasts much longer, there is a fear that the next wave of applications will come in the coming months.
Luminor said there has also been some interest in the Kredex measures, and the bank has offered this opportunity to companies who have approached them. Monika Kallas, head of the bank's Estonian corporate banking unit, said it must be taken into account that the wider impact of the crisis is only just beginning to manifest itself.
Since the beginning of April, Kredex has issued direct sales and investment loans. The conditions for an emergency guarantee for companies operating in the accommodation and catering sector, travel agencies and tour operators are also being developed.
Kredex is also offering emergency microfinance guarantee for micro and small enterprises, which will provide new financing to businesses to overcome the temporary difficulties caused by the coronavirus outbreak.
In addition, an emergency loan is underway for nationally important projects, including Tallink's loan application. Kredex plans to come out with the terms of all new services by the end of this week.
Editor: Helen Wright