Cyprus: 26 June 2020, EU Backs Launch Of Three Covid 19 Support Measures In Cyprus.

Minister of Finance, Mr. Constantinos Petrides helped get the weekend off to an auspicious start by announcing that three measures, designed to counteract some of the negative impacts of Covid 19, had gained EU approval and would be launched with immediate effect.

The specific measures approved were:

1. An interest rate subsidy for new housing loans (excluding mortgages already subsidized under other government schemes) taken out by private individuals to purchase or build primary residences.
2. An interest rate subsidy for new business loans.
3. A one-off payment to the self employed and to small businesses, the activities of which were subject to full or partial suspension as a result of Cyprus Government 'lockdown' measures.

Housing Loan Interest Rate Subsidy

The intention of the subsidy is to assist families seeking to purchase or build their main residence. In doing so, it should also help boost the housing and estate agency sectors of the economy. Key features of the scheme are:

• It relates only to loans approved by one of the 10 credit institutions included as a Licensed Credit Institute (API) under the plan,
• It will apply to loans approved during the period 1 March 2020 and 31 December 2020,
• Disbursement of the loan may take place at any time within two years of the original approval date,
• It cannot be used for a second home purchase or for renovation of an existing home,
• The subsidy can only apply to a maximum of EURO 300,000 of loan, and
• The subsidy will be in place for a four- year period and the interest rate subsidy level will be a maximum of 1.5 percentage points (150 base points).

Business Loan Interest Rate Subsidy

This support measure is intended both to ease working capital problems caused by the Covid 19 pandemic, and, to encourage new investment projects by providing 'cheap' finance. It is directed at all forms of normally viable business ranging from the self-employed through to large corporations. The main provisions of the scheme are:

• It relates to loans approved by an API during the period 1 March 2020 and 31 December 2020 and excludes business loans which already attract an interest rate subsidy under other government schemes,
• Businesses considered 'problematic' under the European Commission definition are excluded,
• The loans must be applied as working capital or to fund investment projects,
• Loans approved on or before 31 December2020 via the EIB, the Cyprus Entrepreneurship Fund or the Pan-European Guarantee Fund may also benefit from the subsidy,
• The maximum amount of loan per business entity on which interest rate subsidy can be claimed is EURO 800,000, and
• The subsidy will be given for a four- year period and will differ according to business sizes as shown below.

Lump Sum Benefit for businesses subject to full or partial suspension

The lump sum payment is targeted at the self-employed and at businesses employing up to 50 people. It is intended to help cover rents or other operating debts that have been incurred because of the full or partial suspension of business due to the Covid 19 pandemic. The payment is effectively a grant and there is no need for individuals or companies to apply to receive it. The government will automatically make a direct payment to any business which received support under the Special Plans of the Ministry of Labour, Welfare and Social Insurance during the period from 13 April 2020 up to and including 12 May 2020. The size of the payment will be linked to the size of the workforce as shown below.

Full detail of the schemes are available in Greek on the Ministry of Finance website. The Minister's announcement may be viewed here.