SBCI Brexit Impact & Covid-19 Loan Schemes

1. Definitions

For the purposes of the Agreement:

“Borrower Eligibility Criteria” means that the Borrower under the Borrower Transaction:

(a) does not have a substantial focus on one or more EIB Group Excluded Sectors (which determination shall be made by the Finance Provider in its discretion based, without limitation, on the proportionate importance of such sector on revenues, turnover or client base of the relevant Borrower);

(b) is established and operating in a Participating Member State;

(c) is not incorporated or established in a Non-Compliant Jurisdiction;

(d) is not engaged in any Illegal Activities;

(e) is not a Sanctioned Person and is not in breach of Restrictive Measures;

(f) is not, to the best of its knowledge, in an Exclusion Situation;

(g) if it is established or incorporated in a country listed for HPTR in Annex I and/or Annex II of the European Council conclusions on the revised EU list of non-cooperative jurisdictions for tax purposes, the Borrower does not benefit from any HPTR as evidenced by a self-declaration of the Borrower provided in a written form to the Finance Provider;

(h) is not delinquent (for more than 20 days) or in default in respect of any transaction (in the case of refinancing, including the transaction that is being refinanced) granted by the Finance Provider or by another financial institution pursuant to checks made in accordance with the Finance Provider’s internal guidelines and Credit and Collection Policies;

(i) is not a Borrower which the Finance Provider has assigned a Moody’s equivalent rating worse than “B3”;

(j) is an SME or Small Mid-cap, that is not active in the financial sector[1];

(k) if the Borrower is an Undertaking in Difficulty on the Borrower Transaction Effective Date, it must not have been an Undertaking in Difficulty on 31 December 2019.

As an exception to the above, if the Borrower is a Micro-Enterprise or a Small-Enterprise that was an Undertaking in Difficulty on 31 December 2019, it shall be eligible, provided that on the Borrower Transaction Effective Date:

(i) it is not subject to collective insolvency procedure under the relevant national laws; and

(ii) it has not received:

(A) rescue aid, which has not been reimbursed (if the aid is in the form of a loan) or terminated (if the aid is in the form of a guarantee); or

(B) restructuring aid in relation to which it continues to be subject to a restructuring plan;

as at the Borrower Transaction Effective Date;

(l) has not received unlawful State Aid or State Aid which has been declared incompatible with the internal market by the Commission which has not yet been returned;

(m)  [reserved];

(n) is not bankrupt or being wound up or having its affairs administered by the courts;

(o) in the last 5 years has not entered into an arrangement with creditors, in the context of being bankrupt or wound-up or having its affairs administered by the courts;

(p)has not been convicted of an offense or subject to a ruling concerning professional conduct, fraud, corruption, involvement in a criminal organisation, money laundering or any other illegal activity where such illegal activity is detrimental to the European Union’s financial interests;

(q) is not performing any Illegal Activities or Excluded Activities;

(r)  satisfies at least one of the following criteria:

Brexit Impact Loan Scheme

(i) its combined exposure of the export/import of products, services or raw materials to/from the UK (including Northern Ireland) equates at least 15% of business turnover;

(ii) its export products, services or raw materials to the UK (including Northern Ireland) equates to at least 15% of business turnover;

(iii) its import products, services or raw materials from the UK (including Northern Ireland) equates to at least 15% of business turnover;

(iv)  its business is indirectly exposed to the UK (including Northern Ireland) i.e. transacts products, services or raw materials with an enterprise that is directly exposed to the UK (including Northern Ireland) equating to at least 15% of turnover; or

Covid-19 Loan Scheme

(v) The business is impacted by Covid-19 resulting in business turnover or profitability being negatively impacted by a minimum of 15%.

(s)  the Borrower is adversely impacted by Covid-19.

“Borrower Transaction Eligibility Criteria” means the following criteria:

(t) the Borrower Transaction shall be provided in compliance with the Relevant State Aid Regime;

(u)  The Borrower Transaction must be made available in a Participating Member State, which means that:

(i)  for Borrower Transactions the purpose of which shall be:

(A) the financing of working capital/liquidity needs or refinancing of existing obligations, pursuant to paragraph (d) below; or

(B) the financing of working capital/liquidity needs or refinancing of existing obligations, pursuant to paragraph (d) below;

(ii) for Borrower Transactions the purpose of which shall be the financing of an investment in tangible or intangible assets, pursuant to paragraph (d) below and where a clear geographical allocation of such investment is possible the relevant investment shall be carried out in a Participating Member State;

(v) the Borrower Transaction is entered into by the Finance Provider during the Inclusion Period;

(w) the Borrower Transaction is granted for one or more of the following permitted purposes: (1) investment in tangible and/or intangible assets and/or (2) working capital/liquidity needs and/or (3) refinancing of existing obligations as defined by the Finance Provider’s Credit and Collection Policies.  For the avoidance of doubt, business transfers shall also be allowed;

(x) the Borrower Transaction is denominated in the Base Currency;

(y) the Borrower Transaction shall have a minimum maturity of 1 (one) year;

(z) the Borrower Transaction must comply with the terms of this Agreement relating to the Transfer of Benefit;

(aa)  the Borrower Transaction does not finance Illegal Activities or artificial arrangements aimed at tax avoidance;

(bb) the documents governing the Borrower Transaction are legal, valid, binding and enforceable under applicable law;

(cc)  the final maturity date of a Borrower Transaction shall not fall after 6 years after the date of the Borrower Transaction;

(dd) the Borrower Transaction does not finance transactions with a Sanctioned Person;

(ee) Borrower Transactions with (i) either a “bullet repayment profile” (defined as a repayment profile whereby the entire principal amount of the Borrower Transaction is to be repaid at maturity) or a “balloon repayment profile” (defined as a repayment profile whereby 30% or more of the initial principal amount of the Borrower Transaction is to be repaid at maturity), and (ii) an initial maturity longer than three (3) years, shall not be eligible for inclusion;

(ff) Borrower Transactions with a “balloon repayment profile” (defined as a repayment profile whereby 30% or more of the initial principal amount of the Borrower Transaction is to be repaid at maturity) shall not exceed 30% of the Maximum Portfolio Volume;

(gg) Borrower Transactions that are delinquent or in default in respect of any other loan or lease either granted by the Finance Provider or by another financial institution pursuant to checks made in accordance with the Finance Provider’s Credit and Collection Policies shall not be eligible for inclusion, provided that for the purposes of this criterion Borrower Transactions are eligible if (i) they have been delinquent for less than 30 days and (ii) such delinquency has not dissuaded the Finance Provider (entirely at its discretion) from lending to that Borrower in accordance with the Finance Provider’s Credit and Collection Policies;

(hh) Borrower Transactions that have an initial maturity longer than six (6) years shall not be eligible for inclusion;

(ii) Borrower Transactions:

(i) provided to a Borrower that is an SME with an initial principal amount higher than EUR 1,500,000 shall not be eligible for inclusion;

(ii) provided to a Borrower that is a Small Mid-Cap with an initial principal amount higher that EUR 1,400,000 shall not be eligible for inclusion;

(jj) the financing under a Borrower Transaction is provided to a Borrower that is deemed to have met the Borrower Eligibility Criteria; 

(kk) the amount committed under the Borrower Transaction shall not result in the EGF Guaranteed Amount of the Borrower Transaction, together with any other 3.1 Relevant Aid Amounts, to exceed the 3.1 Maximum Aid Threshold.

For the purposes of this Eligibility Criterion;

“3.1 Relevant Aid Amounts” means any other amounts provided to the Borrower (together with any other linked enterprises as per the Commission Recommendation), that are subject to the EGF Regime by analogy to Section 3.1 TF (not, for the avoidance of doubt, with any other aid granted under the Temporary Framework) whether through the SBCI, the Finance Provider or otherwise.

“EGF Guaranteed Amount of the Borrower Transaction” means, in respect of a Borrower Transaction covered by a Financing, the product of (i) the Counter-Guarantee Rate (as defined in the Pan European Guarantee Fund Counter Guarantee), (ii) the Guarantee Rate and (iii) the amount of principal committed by the Finance Provider to a Borrower under such Borrower Transaction covered by a Financing.

“3.1 Maximum Aid Threshold” means;

(i) for Borrowers active in the primary production of agricultural products EUR225,000,;

(ii)for Borrowers active in the fishery and aquaculture sector EUR 270,000(iii) for Borrowers active in other sectors EUR 1,800,000When a Borrower (together with any other linked enterprises as per the Commission Recommendation) is active in several of the sectors set out in (i) to (iii) above, such Borrower may be considered eligible provided that the Borrower is able to demonstrate by appropriate means, such as separation of accounts, that the relevant ceiling is respected for each of those activities, that the overall maximum amount of EUR 800,000 is not exceeded for that Borrower and that, where the Borrower is active in the fishery and aquaculture sector or in the primary production of agricultural products, the overall maximum amount of EUR 120,000 and EUR 100,000 respectively is not exceeded, until such time as SBCI has notified the Finance Provider that such amounts have increased to EUR 1,800,000, EUR 270,000 and EUR 225,000 respectively.

With respect to Borrower Transactions denominated in a currency other than EUR, for the purposes of checking compliance with the 3.1 Maximum Aid Threshold  above, the Relevant FX Rate used by the Finance Provider shall be the exchange rate applicable on the Borrower Transaction Effective Date;

(ll)The principal amount committed under the Borrower Transaction covered by a Financing, together with any other 3.2 Relevant Aid Amounts shall not exceed the 3.2 Maximum Aid Threshold.

For the purposes of this Eligibility Criterion;

“3.2 Relevant Aid Amounts”

means any other amounts provided to the Borrower that:

(i) have also been guaranteed under the EGF Regime by analogy to Section 3.2 TF, or under any national guarantee scheme operated under Section 3.2 of the Temporary Framework, and/or

(ii) benefit from an interest rate subsidy under Section 3.3 of the Temporary Framework,

whether through the SBCI, the Finance Provider or otherwise.

“3.2 Maximum Aid Threshold” means any of the below thresholds, at the discretion of the Finance Provider or the SBCI (as applicable):

(iii) double the annual wage bill of the Borrower (including social charges as well as the cost of personnel working on the undertaking's site but formally in the payroll of subcontractors) for 2019, or for the last year available.  In the case of undertakings created on or after 1 January 2019, the 3.2 Maximum Aid Threshold must not exceed the estimated annual wage bill for the first two years in operation; or

(iv) 25% of the Borrower’s total turnover in 2019 or for the last year available; or

(v) up to the Borrower’s foreseen financing needs for a period of 18 months for SMEs, based on a self-declaration by the Borrower (but in any case to be finally determined in line with the Finance Provider’s or the SBCI’s (as applicable) applicable Credit and Collection Policies).

With respect to Borrower Transactions denominated in a currency other than EUR, for the purposes of checking compliance with the 3.2 Maximum Aid Threshold (where such thresholds are set out in EUR) above, the Relevant FX Rate used by the Finance Provider shall be the exchange rate applicable on the Borrower Transaction Effective Date;

(mm) the amount of the Borrower Transactions benefitting a Borrower active in the primary production of agricultural products shall not be fixed on the basis of the price or quantity of products put on the market;

(nn) in relation to Borrower Transactions entered into with Borrowers active in the fishery and aquaculture sector:

(i) the amount of the Borrower Transaction shall not be fixed on the basis of price or quantity of products purchased or put on the market;

(ii)Borrower Transaction shall not be contingent upon the use of domestic over imported goods;

(iii)  Borrower Transaction shall not relate to purchase of fishing vessels;

(iv) Borrower Transaction shall not finance modernisation or replacement of main or ancillary engines of fishing vessels;

(v) Borrower Transaction shall not finance operations increasing the fishing capacity of a vessel or equipment increasing the ability of a vessel to find fish;

(vi) Borrower Transaction shall not finance construction of new fishing vessels or importation of fishing vessels;

(vii)  Borrower Transaction shall not finance temporary or permanent cessation of fishing activities unless specifically provided for in the Regulation (EU) No 508/2014;

(viii) Borrower Transaction shall not finance exploratory fishing;

(ix) Borrower Transaction shall not finance transfer of ownership of a business;

(x) Borrower Transaction shall not finance direct restocking, unless explicitly provided for as a conservation measure by a Union legal act or in the case of experimental restocking;

(oo) for Borrower Transactions entered into with Borrowers active in the processing and marketing of agricultural products:

(i) the Borrower Transaction shall not be conditional on being partly or entirely passed on to primary producers; and

(ii) the amount of Borrower Transaction shall not be fixed on the basis of the price or quantity of products purchased from primary producers or put on the market by the undertakings concerned;

(pp) the Borrower Transaction shall not be conditional on export-related activities towards third countries or Member States, namely financing directly linked to the quantities exported, to the establishment and operation of a distribution network or to other current expenditure linked to the export activity. For the avoidance of doubt, companies that export their goods or services can benefit from the Pan European Guarantee Fund Pan European Guarantee Fund Counter Guarantee, provided that the financing does not cover costs specifically linked to the act of exporting;

(qq) the Borrower Transaction shall have been entered into by no later than 30 June 2022 or such later date as may be notified in writing by SBCI to the Finance Provider;

(rr) the Borrower Transaction shall be in the form of a term senior loan;

(ss) a Borrower Transaction

(i) in the amount of = / < €250,000 provides for a margin (meaning the margin above the funding costs as applied by the Finance Provider in accordance with its standard pricing policy) payable by the Borrower of not more than 3.5 per cent per annum (including all fees applicable to the loans) fixed for the term of the loans; and

(ii) in the amount of  >€250,000 provides for a margin (meaning the margin above the funding costs as applied by the Finance Provider in accordance with its standard pricing policy) payable by the Borrower of not more than 2.75 per cent per annum (including all fees applicable to the loans) fixed for the term of the loans;

(tt) amounts less than or equal to €600,000 made available under a Borrower Transaction are to be made on an unsecured basis and no guarantees will be provided for such Borrower Transaction;

(uu) amounts greater than €600,000 made available under a Borrower Transaction may be secured in line with usual security requirements sought by the Finance Provider save that a personal guarantee may only be sought from third parties where:

(i) the personal guarantee is for the sum of up to 100% of the loan amount under the relevant Borrower Transaction and provided that guarantee is in addition to security provided by that third party securing the Borrower Transaction; or

(ii)  the personal guarantee is for the sum of up to 20% of the loan amount under the relevant Borrower Transaction when that Borrower Transaction is otherwise unsecured;

(vv) Borrowers under a Borrower Transaction may, with the approval of the Finance Provider, be able to avail of interest only payments or capital and interest moratoria for up to a maximum of  90 days over the term of the loan;

(ww) a Borrower Transaction to which the Finance Provider (i) has assigned at the time of entering into the Financing covering such Borrower Transaction a Moody’s equivalent rating of  worse than “B3”, in accordance with the Credit and Collection Policies,  or (ii) has not assigned any rating, is not eligible for inclusion;

(xx) the Finance Provider’s Credit and Collection Policies must apply to all Borrower Transaction applications;

(yy)  the Borrower Transaction must have a final maturity date of no later than 6 (six) years after the Inclusion Period End Date;

(zz) the Borrower Transaction Documents for a Borrower Transaction:

(i) in the amount of = / < €250,000 provide that the benefit of the Pan European Guarantee Fund Counter Guarantee is a minimum of 1.76%; and

(ii)  in the amount of >€250,000 provide that the benefit of the Pan European Guarantee Fund Counter Guarantee is a minimum of 1.80%;

(aaa) a Borrower Transaction can be made available to refinance a facility/facilities to Borrowers in an amount not exceeding 30% of the initial principal amount of the Borrower Transaction with the remaining 70% of the Borrower Transaction to be used for other eligible purposes under the SBCI Scheme except when such facility/facilities was made available under the Brexit Loan and Covid-19 Working Capital Loan Scheme established by SBCI (the “Brexit and Covid-19 Scheme”) to Borrowers who satisfied one of the Brexit Eligibility Criteria (as defined in the Brexit and Covid-19 Scheme), in which case the Borrower may refinance such facility/facilities in amount not exceeding 100% of the initial amount of the Borrower Transaction.

 

[1] active in the financial sector shall mean active in any of the sectors listed in Schedule 14 of this Agreement.