Luxembourg SMEs get further guarantees for bank loans

With passage of legislation, SMEs could get almost 100% of loans guaranteed

More than 200 small and medium-sized (SME) Luxembourg companies will be able to get loan guarantees totalling more than €20 million after an agreement was signed on Monday.

The Mutualité de Cautionnement (MC) – set up by the Luxembourg Chamber of Commerce in 1969 to make it easier for companies to access to bank financing – joined the European Union’s COSME programme.

COSME, which stands for Competitiveness of Enterprises and Small and Medium-sized Enterprises, runs from 2014 to 2020 with a €2.3 billion budget.

It supports guarantees and counter-guarantees to financial institutions so they can provide more loans and lease financing to SMEs.

Francine Closener, secretary of state at the Economy Ministry, said a new law being considered by the Council of State, the consultative body for Luxembourg’s legislation, would “complement” the MC’s participation in COSME.

With the new law, she said, “we can take 80% of the loss” when an SME cannot pay back a bank loan.

“It is an important step for SMEs.”

Together with the MC’s guarantee, companies’ loans will be guaranteed “almost 100%”, Closener said.

Representatives from Banque et Caisse d’Epargne de l’Etat, Banque de Luxembourg, BGL BNP Paribas, Banque Internationale à Luxembourg and Banque Raiffeisen signed an agreement to cooperate with MC within the COSME programme.

COSME’s predecessor, the Competitiveness and Innovation Framework Programme, ran from 2007 to 2013.

It enabled €21 billion in loans and €3 billion in venture capital to be available to almost 400,000 SMEs in Europe.

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