COVID-19: Finance Update – aws bridge- and credit deferral guarantees
03/27/2020 - Reading time: 6 minutes
The current COVID 19 pandemic has a massive negative impact on the liquidity situation of many small- and medium-size companies, particularly due to short-term changes in supply chains and customer relationships. In order to mitigate these negative effects, Austria Wirtschaftsservice GmbH (aws) has been commissioned by the Federal Ministry for Digital and Economic Affairs to provide bridge- and credit deferral guarantees in a fast-track procedure specifically for small- and medium-sized companies in the commercial and industrial sector, but also for the freelance profession.
In order to provide this temporary crisis aid, the aws guarantee guidelines for SMEs have been adapted and now provide for ”bridging and loan deferral guarantees in connection with the coronavirus crisis“. In contrast to the other programs within the aws guarantee guidelines, the freelance profession is also eligible for guarantees.
SMEs in the field of industrial and commercial production, research and development, other services, transport and traffic, processing companies of agricultural products from the first stage, trade and, as mentioned above, the freelance profession are eligible for guarantees, whereby in each case the registered office of the company or a permanent establishment must be in Austria and the company is also operative or operations are intended to be started within a period of 12 months.
Not eligible for the guarantee are fisheries, aquaculture, primary production of agricultural products, coal industry, shipbuilding, steel industry, synthetic fibers industry, banks and other financial institutions, insurance, real estate, associations, regional public authorities and legal entities in which regional public authorities hold directly or indirectly a stake of more than 50% , as well as companies which violate in respect to the (financed) project the War Material Act, the Security Control Act or other Austrian legal provisions, which provide for punishment. For the tourism and the hotel sector a special support program is established by ÖHT.
Moreover, companies are excluded from the granting of such aws guarantee regime if, in the financial year preceding the application, such meet the criteria for the opening of business reorganization proceedings (“URG-criteria“: equity ratio less than 8 percent and notional debt repayment period exceeding 15 years), whereby in this respect the current annual financial statements must be used for the examination of the fulfilment of these criteria at the latest nine months after the last balance sheet date, or if, at the time of the application, the legal requirements for the opening of insolvency proceedings at the request of the creditors are met. Since the application cannot be made directly by the entrepreneurs, but must be made via the (house) bank, the fulfilment of the criteria at the time of the application must be confirmed by the (house) bank when the application is submitted to aws.
Support is provided for financings  by credit institutions for running costs, such as personnel and operating costs, but also for the deferral of existing credit lines, whereby, according to the aws guarantee guidelines, the economic circumstances of the company must be in a manner that allow the expectation that the supported financing can be serviced. Costs which are guaranteed must be company-related and must be incurred for projects that are carried out in Austria. In contrast to the other aws guarantee programs, credit financings with a very short term are also eligible for such form of aws guarantees.
Further key data for the bridging and credit deferral guarantees are:
|guarantee rate||maximum of 80 percent|
|maximum guarantee volume||EUR 2 million per financing and an total EUR 40 million per company or business group (deviations possible in justified individual cases)|
|term||a minimum of 6 months to a maximum of 5 years (current applications can thus be guaranteed until 31 December 2024)|
|collaterals||none (also no personal collateral)|
|fees||0.3 percent p.a. of the guaranteed financing amount according to the repayment schedule of the guarantee agreement to the extent of the guarantee ratio|
temporary promissory note fee of at least 0.2 percent of the commitment for a term of 6 months or at least 0.1 percent for a term of 3 months
Provision charges (taking into account the risk classification) can be added for guarantee amounts not used. A handling fee is also payable.
To the extent permitted under EU state aid law, it is also possible to waive the charging of fees.
Applications are to be submitted via the companies´ (house) bank, whereby aws provides a fast-track procedure for guarantees up to a new aws commitment (i.e. existing aws commitments are not taken into account) of up to EUR 2 million (a checklist for the application and the procedure for granting aws guarantees is attached as Annex ./A).
The finance experts of fwp will be pleased to provide any advice regarding loans, financing, restructuring and, in particular, aws bridging guarantees.
A checklist for the application (fast track procedure) can be found below or here as a download.
Checklist for the application (fast track procedure) 
|Application through the financing bank via the aws aid manager (Fördermanager)||O|
|Provision of documents:|
(i) Promissory note (brief information from the financing bank that it is willing to provide the financing)
(ii) rating of the bank in terms of the one-year probability of default
(iii) confirmation from the bank that the applicant company did not meet the URG criteria in the marketing year preceding the application
|Automated verification by the aws||O|
|Granting of credit (deferral) by the bank in accordance with the conditions of the confirmed application||O|
Subsequent verification of compliance with the conditions in manual form (in the event of non-compliance, the aws guarantee is not considered legally valid)
A (final) billing is not necessary, as the bank must confirm the intended use when the application is submitted.
 The types of financing eligible for guarantees are limited to loans and credits from financial institutions, including subordinated loans to a domestic company and lease financing from leasing companies (financial leasing).
 Costs that can be secured by the bridge guarantee are costs for capitalizable investments and related non-capitalizable expenses, acquisition costs for investments in the sense of company takeovers and succession projects as well as directly related non-capitalizable expenses and costs for non-capitalizable expenses in order to improve the financing structure.
 For guarantees up to a new aws commitment (i.e. existing aws commitments are not taken into account) of EUR 2 million, a fast track procedure is to be applied.