Billions in bank support don’t end with smaller companies

5,400 million euros. According to the Dutch banks (NVB), the Dutch banks said that they offered so much financial support to the companies in a month. Billions are expected to add in the coming months and perhaps years.

According to NVB, nearly 100,000 companies have so far taken advantage of the six-month “refund holidays” banks have been offering for the past month. That’s one in four (staffed) companies in the Netherlands. This has so far involved € 2.4 billion. Another 5,000 existing credit clients received a loan or additional space on current loans from their internal bank. That extra space is about 3 billion euros, so far.

The second scheme related to the bank is the government guarantee on loans for companies to which banks usually do not lend money easily. It was a while before this so-called BMKB scheme could be implemented: first the exact rules had to be expected, and then the systems still had to be adjusted. The NVB expects that this week around 800 to 1000 companies have received BMKB credits, for around 250 to 350 million euros. It is likely that “several thousand” companies will be added.

The conditions for the second guarantee, the GO scheme, which is also available to larger companies, have not yet been published in the official bulletin. Banks expect around 1,100 companies to be interested in this, giving “many billions” of additional credit, according to NVB.

Not everyone helped

Therefore, billions of “financial air” are offered to a large number of companies. But with all the reports on this, there follows a disclaimer from the banks: they can’t, they can, and they won’t help everyone.

At the moment, it appears to be mainly the smaller companies that are fishing behind the financial network. They want relatively small loans, up to € 50,000, so there is a feeling that such an amount shouldn’t be a problem for banks. But they emphasize that this is not easier, but more difficult.

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Until now, this group often only has one business bank account and no credit. The delay in payment, therefore, does not help them. And this means that banks also have much less knowledge about their financial affairs. How do you know if such a company can handle a loan of tens of thousands of euros?

As a result, banks seem reluctant to provide credit to smaller companies, or demand high interest rates to cover the risks. Not every businessman will like that.

Business organizations want 100 percent government guarantees

Another problematic group: companies in sectors that were struggling before the crisis, such as restaurants and shops. The rules formulated by the government of the BMKB scheme prescribe that guaranteed loans can only be granted to “fundamentally healthy” companies. Banks emphasize that they consider this to be an important condition on their own, but they also don’t want supervisors to bother them in a few years because they have neglected their duty of care.

Officially, the Dutch Authority for Financial Markets is not about the relationship between companies and banks: only the duty of care of financial institutions towards consumers is actively supervised. But in the past, banks were still punished for blurring interest rate derivatives for SMEs, so banks are on the safe side.

The hole remains

Groups that are now excluded are actively referred by banks to government regulations. But there is still a gap between what governments offer and what banks offer. Banks are currently busy discussing this with the ministries involved: in recent weeks, guarantee schemes have been adapted and expanded, also in consultation with business organizations.

Part of the small business lobby is held in public. Rabobank President Wiebe Draijer suggested at Buitenhof that he approve groups of entrepreneurs in ‘lots’ in certain sectors: this saves research time, costs and therefore interest charges. Business organizations VNO-NCW and MKB-Nederland also submitted a proposal on Thursday: what if the government now guarantees 100 percent small loans for small and medium-sized businesses? This is already being done in Germany, among others.

Such a guarantee can also help banks work faster, business organizations argue. “It rains with us complaints from entrepreneurs who get zero on the complaint, have to wait a long time, have to pay quite high interest rates or have problems,” says MKB-Nederland President Jacco Vonhoff.

But also in the proposal of the lobby organizations: government guarantees are only for healthy central organizations. “We cannot save anyone, not the government or the banks,” NVB President Chris Buijink said by phone. “That is bad to experience, but it is reality.”