According to Cyprus News Agency (CNA), the plan “is to provide state government guarantees with a total amount of up to €2 billion to Cypriot licensed banking institutions, including subsidiaries of foreign credit institutions with the purpose to provide loans to companies and self-employed persons to help them deal with the consequences of the measures to combat the coronavirus epidemic.”

The plan provides for the granting of guarantees to SMEs and self-employed persons amounting to €1.7 billion and €0.3 bl to large corporations. The plan also aims to cover the credit risk encouraging the banks to provide cheap loans from 2 April 2020 until the end of the year. Furthermore, it aims to cover the credit risk of current loans of self-employed persons, SMEs and large corporations which have been negatively affected by the coronavirus lockdown.

Additionally, the draft of the plan covers the issuance of current accounts and overdrafts that may not exceed 50% of amount offered to a self-employed person, 25% of the amount provided to an SME and 15% to a large corporation.

“The provision of loans aims to cover the companies’ and self-employed persons’ liquidity needs, working capital and investments,” the draft reads. However, the draft clarifies that self-employed or corporations that had non-performing exposures at the end of 2019, will not be eligible for the plan.

Regarding the limit on loans, the draft specifies that a loan cannot exceed an amount that is double a company’s or a self-employed person’s total annual wage bill in 2019 or the latest available year, or cannot exceed the annual wage bill for the first two years of operation in case of companies or self-employed persons that began operations in January 2019.

According to the draft, in exceptional cases and based on liquidity plans, loans can be increased to cover the liquidity needs for the next 18 months of a self-employed person or an SME and the next 12 months of a large corporation.

According to the draft, the plan is expected to be put into force on 2 April 2020 until the end of the year.