Changes to the pricing of Finnvera's domestic financing and to the Start Guarantee
The pricing of Finnvera’s domestic financing will be changed. The service fees for Start Guarantees and SME Guarantees will be rolled back to a pre-COVID-19 level. The change is due to a change in Finnvera's loan and guarantee loss compensation. Additionally, going forward, it will be possible to negotiate for a so-called non-subsidised Start Guarantee, which would facilitate the use of the guarantee in situations where a company is close to reaching the maximum amount of State aid. The new pricing will come into effect on 11 January 2023.
“After the COVID-19 crisis began, the Ministry of Economic Affairs and Employment made a decision to increase the credit loss compensation rate for financing subject to the Act on the Promotion of Employment and the Economy to 80 per cent, and Finnvera has introduced the updated compensation rate to products where this price model applies. The ministry has now rolled back the credit loss compensation of Finnvera’s domestic financing to a pre-COVID-19 level of 50 per cent. This affects the prices of Finnvera's domestic financing. At the same time, we reviewed the service fees of domestic financing”, says Executive Vice President Juuso Heinilä, who is responsible for SME and midcap financing at Finnvera.
Finnvera's new pledge regarding credit loss compensation entered into force on 8 December 2022. The pledge applies to credit and guarantees that have already been granted as well as to new credit, so that the loss compensation is 50 per cent for credit and guarantee losses recorded on or after 1 January 2023.
In the case of new financing arrangements, the prices of loans and guarantees will be increased on average by 0,7 percentage points. The service fees of Start Guarantees and SME Guarantees will be raised to 1 per cent.
Going forward, the pricing for domestic guarantees and loans will follow a single risk-based pricing model. The change will increase the average guarantee commission by approximately 0,7 percentage points. The guarantee commissions of Start Guarantees and SME Guarantees will not be changed. The change only applies to new financing and will not be enforced retroactively.
The service fees of Start Guarantees and SME Guarantees will be rolled back to a pre-COVID-19 level of one (1) per cent. The minimum service fee is 150 euros.
Non-subsidised pricing option for Start Guarantees
An option to negotiate for a non-subsidised Start Guarantee has been added, which increases the price slightly while allowing Finnvera's Start Guarantee to be granted to projects receiving other public aid. Public aid or grants are given out by, for example, Business Finland, ELY Centres and municipalities.
“This means that, going forward, Start Guarantees can be priced as non-subsidised guarantees where necessary. In particular, this applies to situations where either the client is about to reach the maximum amount of public aid that can be granted or the same project is receiving other financial aid or grants. We are hoping that the change will improve the product’s usability and also increase the impact it has on the client’s end", Juuso Heinilä says.
If you wish to know more about the product changes, please contact Finnvera's customer service, tel. +358 29 460 2582.