Short Reads

Dutch 'Growth Facility' approved by the European Commission

Dutch 'Growth Facility' approved by the European Commission

Dutch 'Growth Facility' approved by the European Commission

10.07.2018

The European Commission has concluded that the "Growth Facility", a Dutch scheme to facilitate investments by providing guarantees on 50% of new subordinated loans and equity, does not involve state aid within the meaning of EU rules.

The Dutch Growth Facility is a governmental guarantee scheme meant for small and medium-sized companies wanting to attract venture capital quickly, in order to finance activities such as acquisition of a new entity, a buy-out or an international expansion. Financing such activities often proofs to be difficult, especially for small and medium-sized companies. In order to support these companies in such activities, the Dutch State created the Growth Facility, which offers the party financing the activity a 50% guarantee of new subordinated loans and equity to these companies for up to 12 years. Loans guaranteed under the Dutch Growth Facility can range from €2.5 million to €25 million.

The Dutch State compensates 50% of any loss, which lowers the risks of the financing party significantly. In order to apply for the Growth Facility as a financing party, you should apply for participation in the programme with the Growth Facility team. As a company, you cannot apply for the Growth Facility, but you can turn to one of the financing parties participating in the Growth Facility.

The European Commission faced the question whether or not the funds provided by the Dutch State under the Growth Facility qualify as state aid. The Commission concluded that the Dutch guarantee scheme does not constitute state aid to the financing parties. Relevant factors supporting this conclusion were that the fees paid in exchange for the guarantees give the Dutch State an appropriate remuneration level, which ensures that the Growth Facility is self-financing.

In March 2018, the Commission already approved the 'Extended Growth Facility', which is a similar measure available for fast growing medium and large companies. Loans under the Extended Growth Facility can range from €1.5 million to €150 million and can last for up to 8 years.

Team

Related news

26.06.2020 EU law
E-book: 'Practical implications of ESG disclosure regulations'

Articles - As of 10 March 2021, many financial market participants and financial advisers will be subject to new disclosure obligations following the entry into force of the EU Sustainable Finance Disclosure Regulation (SFDR) on 29 December 2019. The SFDR sets rules on transparency with a view to promoting both the integration of sustainability risks into investment processes and disclosures to investors.

Read more

29.06.2020 NL law
European Banking Federation Guidance on testing of Cloud Exit Strategy

Short Reads - Financial institutions may outsource critical or important functions to cloud service providers (“CSPs”). On 25 February 2019 the European Banking Authority (“EBA”) provided guidelines (the “EBA Guidelines”) laying out the framework for outsourcing arrangements. The EBA Guidelines require institutions to have a comprehensive, documented and sufficiently tested exit strategy (including a mandatory exit plan) when they outsource critical or important functions.

Read more

25.06.2020 NL law
Een groene encyclopedie voor de financiële sector

Short Reads - Op 22 juni 2020 is de Europese taxonomieverordening (Verordening (EU) 2020/282) gepubliceerd. De verordening wordt gezien als een mijlpaal voor de verduurzaming van de financiële sector. De Europese Commissie ziet het herstel en de wederopbouw van de economie na de coronacrisis als een kans voor een fundamentele verandering naar een duurzame economie.

Read more

29.06.2020 NL law
Nieuwe publicaties van het netwerk van centrale banken en toezichthouders

Short Reads - Het Network for Greening the Financial System (NGFS) benadrukt opnieuw het toenemende belang van klimaatverandering voor centrale banken en toezichthouders. Klimaatverandering leidt tot financiële risico’s en dat betekent dat centrale banken en toezichthouders klimaat- en milieugerelateerde risico’s in hun beleid en toezicht moeten integreren.

Read more