The Slovenian National Assembly has adopted the Act on Deferred Payments of Borrowers' Obligations (Zakon o interventnem ukrepu odloga plačila obveznosti kreditojemalcev) (the »Act«), an intervention measure aiming to solve companies' liquidity problems as a result of smaller demand, production downtime and problems in the supply chains due to the COVID-19 epidemic. The Act will become effective the day after being published in the Official Gazette.
The measure will apply to banks with registered seats in Slovenia and to banks from other member states with a branch office in Slovenia, but not to cross-border financing.
The banks will need to grant a moratorium on loan payments (odlog) for a period of 12 months on the request of the borrower, but only on payments which were not due on March 12 when epidemic in Slovenia has been declared. The request needs to be filed within 6 months after Slovenia cancels the epidemic status at the latest. A bank and a borrower nevertheless keep the freedom of agreeing on more favourable loan conditions.
Who can apply? Companies registered in Slovenia, cooperative associations (zadruge), associations (društva), institutes (zavodi), foundations (ustanove), natural persons who are employers and self-employed persons with registered seat/permanent address in Slovenia, heads of agricultural holdings (nosilec kmetijskega gospodarstva) and heads of supplemental activity on a farm (nosilec dopolnilne dejavnosti na kmetiji) in line with the agriculture act, and natural persons that are citizens of Slovenia and have a permanent address in Slovenia. Apart from natural persons, all borrowers will have to prove they have had on December 31, 2019 all statutory contributions, taxes and charges paid or that on the day of application to a bank, payment of these amounts is in line with the law suspended or that these amounts may be paid in instalments.
In its request, a borrower will have to explain its (business) situation due to the epidemic and substantiate why it cannot ensure repayment of its obligations towards a bank. Companies classified as big will in addition have to substantiate that payments to banks would cause such liquidity problems that a company could face solvency problems
This measure will apply not only to existing loans, but also to loan agreements executed during the time of this Act being in force.
A bank which will refuse to grant a moratorium on loan payments will face a fine in the amount of EUR 80,000 to EUR 250,000.
The measures from this Act will be in force for 18 months after grounds for them cease to exist.
The banks in Slovenia are already taking action in this regard and are inviting their customers to contact them as soon as possible when they notice first signs of downturn to solve the situation on time by amending loan conditions or restructure the loans. To overcome liquidity problems, companies can reach for liquidity loans, bridge loans, increase of credit or account limit.
Furthermore, new financial products from the Slovenian Enterprise Fund (Slovenski podjetniški sklad) and SID bank are expected to ease the current situation.
