Decree-Law No. 10-J/2020, of March 26, approved a new package of exceptional measures to protect companies' credit in the context of the COVID-19 pandemic, which will be of enormous importance to the economic fabric of Madeira.
Below are 5 quick answers to the main questions that business owners may have in this area.
1 – Which credit operations are covered?
They are located covered Credit operations granted by:
- Credit institutions;
- Financial credit companies;
- Investment companies;
- Financial leasing companies; companies of factoring: e
- Mutual guarantee societies.
Excluded, However, the following credit operations:
- Credit or financing for the purchase of securities or the acquisition of positions in other financial instruments, whether or not secured by those instruments;
- Credit granted to companies benefiting from schemes, subsidies or benefits, particularly tax benefits, for establishing their headquarters in Portugal, including for investment activity;
- Credit granted to companies for individual use through credit cards for members of management bodies, supervisory bodies, employees, or other collaborators.
2 – Which companies have access?
Only companies that cumulatively meet the following conditions can apply for extraordinary liquidity support:
- They must be headquartered and conduct their economic activity in Portugal;
- Whether they are classified as micro-enterprises, small or medium-sized enterprises;
- They must not be, as of March 18, 2020, in arrears or default on payments to the institutions for more than 90 days, must not be in a situation of insolvency, or suspension or cessation of payments, or on that date must not already be subject to enforcement proceedings by the institution;
- Ensure your situation is regularized with the Tax and Customs Authority and Social Security, excluding debts incurred in March 2020 for this purpose, up to April 30, 2020.
3 – What are the support measures?
- Prohibition of revocation, Total or partial, of contracted credit lines and loans granted, in the amounts contracted on the date the support measure comes into effect, during the period in which it is in effect;
- Extension, for a period equal to the duration of the support measure, of all loans with capital repayment at the end of the contract, in force on the date the measure comes into effect, together with all their associated elements, including interest, guarantees, in particular those provided through insurance or credit instruments;
- Suspension, Regarding loans with partial repayment of principal or with partial maturity of other monetary payments, during the period in which the support measure is in effect, the payment of principal, rents and interest due until the end of that period will be suspended, with the contractual payment plan for installments of principal, rents, interest, commissions and other charges being automatically extended for a period identical to the suspension period, in order to ensure that there are no other charges beyond those that may arise from the variability of the reference interest rate underlying the contract, and all elements associated with the contracts covered by the measure, including guarantees, will also be extended.
4 – And what happens to the contracts?
In the contracts covered by the support measure:
- There is no breach of contract;
- There is no legal basis for activating early termination clauses;
- The accrual of interest due during the extension period is not suspended; interest will be capitalized into the loan amount with reference to the time it is due at the rate stipulated in the contract in effect; and
- The guarantees granted by companies or third parties, specifically the effectiveness and validity of insurance policies, sureties, and/or guarantees, do not become ineffective or cease to exist.
5 – How can the company access these support measures?
Companies wishing to benefit from the support measure must submit, either physically or electronically, to the lending institution a declaration of adherence to the application of the moratorium, accompanied by documentation proving the regularity of their tax and social security contributions.
The financial institution, within a maximum period of five working days after receiving the declaration and documents, applies the support measure with effect from the date the declaration is submitted.