Question of the day

In general, the inability to pay off a loan due to a justifiable impediment or exceptional change of circumstances (see Q1 and Q2) is difficult to justify and prove on the grounds that the lack of financial means to pay the debt cannot be considered as a ground for non-performance or suspension of the payment obligation (regardless of the reasons causing this lack of financial means). With this in mind, in a situation where the undertaking is in a financial impasse, which is primarily due to a lack of financial resources for various reasons (e.g. drastic drop in sales, respectively in income), before resorting to invoking the terms of justification due to an impediment or exceptional change of circumstances, the debtor may consider, in the first place, the following solutions:

Solution 1. Interest subsidy programme

This aid instrument was implemented by the Law establishing measures to support entrepreneurial activity and amending certain legislative acts No 60/2020 for a fixed period of time (valid until December 2020). Under this programme, the State undertook to repay the borrowers the loan interest paid to the lenders. Interest on the loan must first be paid by the borrower and then, by submitting a claim to the State Tax Service (SFS), it is to be repaid.

Main eligibility criteria:

— the credit agreement must be concluded between 1 May 2020 and 31 December 2020 (this rule does not apply to farmers affected by natural disasterswho are entitled to benefit from the scheme regardless of the date of the credit agreement);

— the maximum amount of credit (s) for which the borrower is entitled to the subsidy is equal to the cumulative amount of salary payments declared by the borrower to SFS for the period September 2019 – February 2020;

— the maximum annual nominal interest rate eligible for the subsidy is limited to 8.76 % in national currency and 4.40 % in foreign currency.

In order to benefit from the programme, the borrower must submit an application to the Directorate-General for Tax Administration of his service area (see: https://www.sfs.md/Adresetelefoanedecontactsiemail.aspx) or to the Directorate-General for Large Taxpayers until 31 January 2021. The request can also be sent by email, with the application of the advanced qualified electronic signature.

Note Bene:

The subsidy may be granted for interest paid by the borrower between 1 May and December 2020 and shall be made only in relation to interest on loans granted by licensed banks in the Republic of Moldova or authorised non-bank lending organisations (RNQOs).

Solution 2. Direct negotiation

The National Commission for the Financial Market (CNPF) encouraged the NCOs (as a recommendation, but not as a regulatory rule) to reduce the calculated annual percentage rate of charge on loans by at least 5 % for the loan period from 17 March 2020 to 31 May 2020 and also not to apply penalties or interest for late payment. On that basis, the borrower may request direct renegotiation with the NCOs.

Solution 3. Financial guarantee from the Organisation for the Development of Small and Medium-sized Enterprises (ODSME) under the Credit Guarantee Fund for Small and Medium-sized Enterprises (SME)

The financial guarantee by ODSMEs under the SME Credit Guarantee Fund is a mechanism for issuing financial guarantees, specifically targeted at SMEs.

When an SME intends to take out a loan and does not have sufficient resources to provide the guarantees required by the bank for repayment, the ODSME can intervene as a guarantor to cover up to 80 % of the requested amount of the loan. For example, if an SME has to borrow MDL 10 million but does not have sufficient resources to meet the guarantee, ODIMM can provide a financial guarantee of up to MDL 8 million to the benefit of the borrower (SME).

To benefit from this programme, the company must submit a loan application to an ODSME partner bank (for more details see: https://www.odimm.md/ro/banci-partenere-fgc). The application will be examined by ODIMM and the bank within up to 5 working days.

Note Bene:

In accordance with the Regulation on the organisation, operation and use of the Credit Guarantee Fund for Small and Medium-sized Enterprises approved by Government Decision No 828/2018, financial guarantees are issued within the limits of the SME Credit Guarantee Fund. Because of this, ODIMM provides financial guarantees on a first-come, first-served basis, and when the fund limit is exhausted, SMEs will not be able to benefit from the programme. However, the Credit Guarantee Fund is supplemented annually by additional funds. Thus, an SME refused by ODIMM for the reason indicated above may apply again for the financial guarantee once the Fund is replaced.

Source: Extract from the publication “Emergency Legal Advice for SMEs” prepared by the Economic Council to the Prime Minister and supported by the EBRD Impact Fund for Small Business.