Brussels, 22/05/2008 (Agence Europe) - On Tuesday 20 May, the European Commission adopted a new Notice on state aid in the form of guarantees. By establishing clear and transparent methodologies to calculate the aid element in a guarantee, the text provides simplified rules for SMEs. In a press release, Competition Commissioner Neelie Kroes said “The new notice allows for a more transparent use of guarantees, especially in order to facilitate financial support for SMEs”. MEPs welcome the measure, but some of them believe that the Commission should include state guarantees in rules on block exemption.
State guarantees are useful tool, because they do not involve payments from the state to companies but rather commitment by the state to assume, for example, responsibilities of a company to its creditors or investors in the event of bankruptcy. Gerhard Huemer, Economic and Fiscal Policy Director at the European Association of Craft, Small and Medium-sized Enterprises (UEAPME) said, SME development aid facilitates their access to finance and is far less costly than subsidies. He also stated that, “if a project supported by a guarantee works well, it costs the state nothing”. He did, however, recognise administrative difficulties with European regulation on state aid and acknowledged that ”You cannot say in advance how much subsidy is involved”, which can rage from 0% of the guarantee if all goes well to 100% if the project fails. To resolve this problem, the new Commission text introduces new clarifications and immediatley points out that a guarantee proposed in conditions that are acceptable to investors in a market economy and does not therefore constitute de facto authorised aid. It is still necessary to determine whether the premium paid by the company in exchange for the guarantee corresponds to the level of risk and is therefore a “normal” premium. The communication contains a grid to this end, which includes certain premium levels for different ratings (risk assessments). The guarantees proposed for the premiums comply with this grid and are not considered to be aid. The communication explains that a single premium can be applied across the board for schemes, when the guaranteed amount remains below €2.5 million per company. This allows for a risk-pooling effect in favour of low-amount guarantees for SMEs. Mr Huemer was pleased to announce that, “I think in the end they found a good balance between practicality and reality of the market”. On the other hand, he underlined that SMEs would benefit more from guarantees if the latter were included in block exemptions whose entry into force is planned in July. The communication can be consulted at: (http: //ec.europa.eu/comm/competition/state_aid/reform/guarantee_notice_fr.pdf). (O.L.)