Government extends interest rate subsidy scheme

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The government extended its interest rate subsidy scheme for housing and corporate loans until the end of 2021 and raised the ceiling for eligible loans, Finance Minister Constantinos Petrides said Friday.

He vowed the government will utilise all EU tools to support households and businesses amid the pandemic.

“We are aware of market challenges and we heed the cries of our fellow citizens and we will continue to support them,” Petrides.

He said the cabinet decisions complement the disbursements of €200 mln in one-off grants for approximately 30,000 businesses.

The decision on corporate loans requires the EU Commission’s approval based on state aid rules.

Since March 2020, a total of 2,339 housing loans valued at €301 mln received state subsidy while 339 corporate loans valued at €87 mln were approved under the scheme.

“Following the extension until end-2021 and the increase in the (eligible) loan-ceilings the value of subsidised loans by the end of the year will exceed €1 billion,” Petrides said.

The ceiling on loans for house purchase rises to €400,000 from €300,000. The scheme provides for the subsidy of interest of 1.5% for four years and the maximum grant is now €24,000.

Petrides said borrowers who already received a loan under the current scheme can apply to receive a subsidy for up to €400.

“These schemes have assisted our fellow citizens who decided to proceed with a house purchase,” Petrides said.

Furthermore, the Cabinet decided to significantly increase the ceilings of eligible loans following the respective increases by European Union rules.

The ceiling for corporate loans of self-employed persons rose to €1.8 mln from €800,000 while loans for companies operating in fisheries rose to €270,000 from €120,000.

And the ceiling for loans for companies or self-employed persons that operate in the primary production of agricultural products rose to €250,000 from €100,000.

“The ceilings have more than doubled as set out by the EU and we opted to provide the highest possible subsidy as we believe this will assist the business world to the highest degree,” Petrides said.

Under the scheme, the interest rate will be subsidised up to 2% for the first two years for all businesses, while from the third until the fourth year the loan will be subsidised up to 2% for small and medium-sized corporations and up to 1.5% for larger corporations.