Late last week, the European Commission (EC) amended the Temporary Community Framework (TCF) for state aid measures to support access to finance in the current financial and economic crisis, originally adopted on December 17, 2008 under EC Treaty state aid rules. The TCF included various conditional temporary measures, in effect until December 31, 2010, to allow member states to address “exceptional difficulties” faced by healthy domestic companies in obtaining financing, including providing subsidized loans on a case-by-case basis, loan guarantees at reduced premiums, risk capital for small and medium-sized enterprises, and direct aid of up to €500,000. The latest amendments were technical in nature, modifying various reference and discount rates, the rates to which premiums can be reduced, and other similar matters.

The EC also updated its Handbook on Community State Aid Rules for Small and Medium-sized Enterprises (SMEs) to reflect the various state aid measures encompassed within the TCF that can be undertaken specifically to support the access to finance of SMEs in the current financial and economic crisis. Subject to various conditions, such measures include providing lump sum aid of up to €500,000 per SME during the next two years, state guarantees for loans to SMEs in the form of reductions in the premiums to be paid, aid in the form of subsidized interest rates applicable to all types of loans made to SMEs, including investment loans related to products which significantly improve environmental protection, and a temporary deviation from 2006 risk capital guidelines.

Following the amendment of the TCF, the EC approved four aid schemes which allow state aid to granted in the form of guarantees on working capital or investment loans in Germany, France, Luxembourg and the United Kingdom.