MNB to allow guarantee fees on top of FGS, FGS+ APR cap

MNB

The National Bank of Hungary today said it will allow lenders who use cheap financing from the Funding for Growth Scheme (FGS) and the spin-off FGS+ to add guarantee fees on top of a 2.5% lending margin limit.

"This step – while raising financing costs just a bit – will allow a number of micro- and small businesses access to credit available under the program," the MNB said.

Under the schemes, The MNB provides zero-interest refinancing to banks which they can lend to SMEs at an APR not exceeding 2.5%.

The MNB said it is extending the deadline for calling down FGS and FGS+ credit until the end of 2016, "in the interest of the implementation and financing of investments requiring much time".

Originally, the allocated amounts under the programs were to be available until December 31, 2015, with some exceptions. The deadline was June 30, 2016 for investment loans and the advance financing of EU support and financial leasing. The deadline was also June 30, 2016 for the pre-financing of non-investment-related funding available annually; however, when such loans are repaid, banks may reuse the credit till the end of 2018. The deadline for factoring transactions is December 31, 2018.

The MNB also said it is broadening eligibility for FGS and FGS+ credit to "the construction of ʼgreenʼ residential property that uses energy-savings solutions".

At present, the credit may not be used for the acquisition, construction or expansion of any residential property.

Details of the changes, to come into force on May 1, will be announced, the MNB said.

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