The President of Costa Rica signed, this Wednesday, the “law for the creation of the National Guarantee Fund for the support of companies affected by COVID-19 and the economic recovery”, which allows the creation of loan guarantees to grant loans to people and businesses economically affected by the COVID-19 pandemic
The Guarantee Fund is a financial instrument through which the State allocates an amount that will be guaranteed to all companies that, affected by the pandemic, find it difficult to access loans from banks and other financial entities. This fund will improve conditions, terms and interest rates for companies trying to overcome the impact generated by the pandemic.
With these new loans, we are providing an opportunity to generate employment, economic activity and recovery for Costa Ricans. These loans are available, through the financial sector, which helps businesses to have real credit options. It is an opportunity, and like all opportunities, we must take advantage of it,” said President Carlos Alvarado.
Over 3 years, the Guarantee Fund will receive a $270 million loan from the Central American Bank for Economic Integration (CABEI), which will be used to support bank loans granted by banks to individuals and businesses affected by the pandemic.
In doing so, the State will grant bank loans up to 75% of the principal amount of the credit granted by the various banking establishments to the thousands of companies affected by the pandemic. These guarantees would come into force in the event of non-payment by the borrower
The 75% guarantee means that if a company obtains a loan of 4 million colones, but fails to repay it, the Guarantee Fund will cover 3 million colones to the lending institution that granted the loan. This results in lower credit risk for the lending institution.
The new law will give priority to micro, small and medium enterprises, since 50% of the resources must be directed to companies with 100 employees or less.
Potential beneficiaries of this guarantee fund must have a good credit history before the health crisis, not be overdue by more than 60 days, document the impact of the pandemic and maintain workers at the time of the request.