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EC approves Hungary state aid for companies

The European Commission said it approved a state aid scheme by Hungary for companies facing financing troubles because of the credit crunch.

The scheme allows authorities to grant aid in the form of subsidized guarantees for investment and working capital loans and financial leases contracted until December 31, 2010. Under the scheme, the guarantee fee for loan and leasing guarantees can be reduced by 25% under market levels. The guarantee coverage can amount to 90% of the value of the loan or lease. Only SMEs (with annual revenue up to €2.5 million) that were not already in difficulty on July 1, 2008 are eligible for the support.

The scheme meets the conditions of the Commission's Temporary Framework for state aid measures to support access to finance in the current financial and economic crisis because it is limited in time, respects the relevant thresholds and applies only to companies that were not in difficulty on July 1, 2008, the Commission said.

“By facilitating the access of firms to loans, the notified measure is an effective way of encouraging business investment and economic recovery, without unduly distorting competition,” said Competition Commissioner Neelie Kroes.

The scheme is to be implemented by Garantiqa-Hitelgarancia on behalf of the Hungarian state. It is already the third Hungarian measure authorized under the Temporary Framework. (MTI – Econews)