5 myths about de minimis guarantees

Working capital loans under the de minimis guarantee that finance current operations and help entrepreneurs maintain financial liquidity, are a good solution for companies that are just starting their business or do not have adequate security. They are intended for micro, small and medium-sized enterprises. We debunk myths about de minimis guarantees.

What is a de minimis guarantee?

The de minimis guarantee is state aid in the form of various discounts, e.g. in depreciation, tax allowances or in the offered loan on preferential terms. A loan with a de minims guarantee is in fact a combination of two products - on the one hand, a financial instrument that secures the loan repayment, and on the other - state aid under de minimis support.

A bank guarantee is a product to which three parties are parties. On the one hand, it is the bank that grants the loan, on the other - the entrepreneur who takes the loan, and on the third - the guarantor bank, which takes responsibility for the repayment of liabilities in a situation when the entrepreneur loses financial capacity or struggles with various types of problems. What does such a guarantee give each party? It is a good protection for the bank - it does not bear any risk related to the funds withdrawn, because even if the owner of the company fails, the guarantor will pay off all liabilities resulting from the repayment of installments. So what does the guarantor bank gain? First of all, it should be remembered that he retains the full right to pursue claims against the entrepreneur in a situation where the payment of the guarantee would actually take place. On the other hand, there is no need to convince the owner of the benefits - a loan with a de minimis guarantee for many companies is the only way to obtain funding. For others, it becomes a bargaining chip, thanks to which they can negotiate better terms for themselves.

Loans with a de minimis guarantee are therefore an ideal solution for companies that are struggling with various financial problems and under "normal" conditions would not have a chance to obtain funding. However, it should be noted that this product often does not agree with the expectations of entrepreneurs about it. Why?

First of all - the de minimis guarantee is not a subsidy

At the beginning, it is worth noting that the de minimis guarantee itself is not obtaining any additional funds (apart from the loan). In fact, the entrepreneur does not see any money, because if the guarantee occurs, the funds will go directly to the bank that granted the loan.

Importantly and worth emphasizing, the receipt of a guarantee does not release the entrepreneur from his obligations of timely repayment of loan installments. If the guarantor bank is forced to repay the loan for the entrepreneur, it will have the full right to claim a refund from the business owner. This is due to the fact that the main assumption of the de minimis guarantee is to help in obtaining a loan and to reduce the costs associated with it.

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Secondly - the de minimis guarantee is for all companies from the SME sector

As it was emphasized at the beginning - a de minimis guarantee is not an ordinary guarantee. It is distinguished by the fact that it has been combined with aid granted by the state (under de minimis aid) and thus it is granted on special, preferential terms (as regards the cost of the entire operation).

Moreover, the fact that these guarantees are granted under de minimis aid means that not every micro, small or medium-sized company will be able to take advantage of it. Enterprises that have exhausted the limit of de minimis aid are excluded from BGK support (because it is the guarantor). Currently, it is, in principle, 200 thousand. euro in the last three years. This means that if the company used during the above-mentioned period of subsidies, reductions or tax exemptions granted as this type of support, it should check carefully that it has not exceeded the said limit.

Thirdly - a loan with a de minimis guarantee can be used for any purpose

As mentioned at the beginning, the de minimis guarantee covers working capital loans that can be used for purposes related to the company's day-to-day operations. Therefore, these funds can be financed, inter alia, by payment of invoices for purchased goods and materials or settlement of liabilities towards the tax office or the Social Insurance Institution.

Fourth - to get a loan with a de minimis guarantee, you have to go to BGK

Bank Gospodarstwa Krajowego (BGK) is responsible for granting and servicing de minimis guarantees. However, the procedure of applying for a loan with the said guarantee is practically no different from applying for "ordinary" funding. The entrepreneur takes care of all kinds of formalities in a commercial bank of his choice. There is one condition - this institution must have a cooperation agreement signed with BGK.

The road to the de minimis guarantee begins at the time of submitting the loan application. An application for a loan repayment guarantee should also be submitted with it. This form should contain the necessary information that will allow you to apply for aid.

Fifth - the de minimis guarantee is only an empty promise

Many entrepreneurs may think that the de minimis guarantee is in fact not granted at all, or that in order to be able to take advantage of it, it is necessary to meet specific, complicated requirements. The reality is completely different.

So far, the de minimis guarantee has been used by most entrepreneurs in economically developed regions, i.e. in Mazowieckie, Śląskie and Wielkopolskie voivodships. The most numerous group of entrepreneurs from the SME sector (according to the number of guarantees granted) that benefited from this aid are micro-entrepreneurs (71%). In turn, small entrepreneurs took out relatively higher working capital loans - as a consequence, their share in the value of de minimis guarantees is 41%. According to the Polish Classification of Activities, the key role in the structure of de minimis guarantees is played by industries related to trade (41%), construction (20%) and processing (18%).