(0)474 27 51 33 | T. +32 (0) 11 52 05 30

LEAGLE BVBA
Ekselsebaan 6 bus 2 | 3940 Hechtel-Eksel
M. +32 (0)474 27 51 33 | T. +32 (0) 11 52 05 30 | [email protected]
GOVERNMENT GUARANTEES FOR SMEs
Nowadays, SMEs often don’t have the possibility to retrieve money at the stock exchange,
whereupon they become dependent on financial institutions to grant credits. When the financial
institutions fail to do so, mostly by tightening the granting criteria, there’s a chance that SMEs will
struggle with certain problems. Where should they attain funds? These issues are one of the main
reasons why the Flemish government provides government guarantees for SMEs, in view of the
stimulation, development and financing of SMEs.
A government guarantee is a commitment of the authority to secure the creditor (the financial
institution) whereby the authority pledges itself to accomplish, completely or partially, the
obligations of the debtor (the borrower – SME) if it were to default. Towards the credit institution,
the government undertakes commitments and obligations, and pledges itself to take over the
interest and the remaining amount of the loan when the debtor were to default. The most important
target of the government guarantee is to facilitate or promote initiatives which the government
deems desirable or useful.
The Flemish government is responsible for the execution and in control of the Flemish government
guarantee. Participatiemaatschappij Vlaanderen (in short “PMV”) and its subsidiaries
(Waarborgbeheer NV and Gigarant NV) practice the management of the guarantee regulation. The
current commitments of the borrower, which can be brought under guarantee, amount maximum
half a million euros under Waarborgbeheer NV. Under Gigarant NV, this limitation can be exceeded.
With the government guarantee, the Flemish government meets with one of the most important
structural weaknesses of enterprises, namely the lack of necessary certainties for new or additional
investments. They want to limit the impact of the market failure of SMEs whereby the government
effort remains necessary. The granting of guarantees is a clear element of allowed governmental aid
and is important in order to challenge the problems concerning the financing of SMEs. As a result of
the direct award of government guarantees to the financial institutions by the Flemish government,
the Flemish Region will be responsible for the risks (eg. obliged to pay the guarantee) associated with
the execution of the government task.
The self-employed, the liberal professionals, non-profit organizations, SMEs, as well as large
companies, may be considered for the government guarantee. On a case by case assessment the
government tries to ascertain whether a particular company will be eligible for the granting of
government guaranties or not. The registered office of the borrower must be established on the
territory of the Flemish Region, when the investment takes place outside that territory. When the
investment does occur in the territory as mentioned above, the registered office may also be located
outside the Flemish Region.
Disclaimer
De informatie over juridische onderwerpen onder ‘LEAGLE weetjes’ zijn louter informatieve besprekingen en algemene toelichtingen; zij kunnen niet als juridisch
advies worden beschouwd. LEAGLE aanvaardt geen aansprakelijkheid voor enige schade die zou voortvloeien door verder te gaan op de informatie hieruit. Voor
persoonlijk en op maat gemaakt juridisch advies dient u contact op te nemen met LEAGLE of desgevallend een gekwalificeerde advocaat voor advies op basis
van uw persoonlijke situatie.
LEAGLE BVBA
Ekselsebaan 6 bus 2 | 3940 Hechtel-Eksel
M. +32 (0)474 27 51 33 | T. +32 (0) 11 52 05 30 | [email protected]
Some NACE codes and companies are excluded from the government guarantee, such as agriculture,
fishery and aquaculture, because these sectors are highly subsidized and specific domains in the
context of State aid already.
A credit can only qualify for a government guarantee when it is granted by a guarantee holder (the
financial institution which grants funds). The government will never contract directly with the
borrower, but only with the financial institution. The government doesn’t have the duty to check
upon every entrepreneur. This remains a task of the financial institution. The government would like
to develop and to nurture entrepreneurship, but at the same time, tries to minimize the risks.
The government guarantee can only be granted as a certainty of financing agreements and other
transactions set by the Flemish government. Each financing and other transaction must meet the
target of the guarantee provision: the stimulation, the development and the financing of SMEs. The
Flemish government never covers more than 75% of the default. Suppose that the amount for which
the borrower is in default is 100.000€, only 75.000€ can be guaranteed. In addition to the Flemish
government, the lender will also carry part of the risk.
In addition to the guarantee regulation, there are also special guarantee regulations, including the
crisis guarantee and the green guarantee regulation.
Would you like to know more? Feel free to contact the LEAGLE-team!
Disclaimer
De informatie over juridische onderwerpen onder ‘LEAGLE weetjes’ zijn louter informatieve besprekingen en algemene toelichtingen; zij kunnen niet als juridisch
advies worden beschouwd. LEAGLE aanvaardt geen aansprakelijkheid voor enige schade die zou voortvloeien door verder te gaan op de informatie hieruit. Voor
persoonlijk en op maat gemaakt juridisch advies dient u contact op te nemen met LEAGLE of desgevallend een gekwalificeerde advocaat voor advies op basis
van uw persoonlijke situatie.

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