COVID-19: Luxembourg’s Aid Scheme and Loan Guarantee Scheme

Like many other European states, Luxembourg took, and is still about to take, many unprecedented support measures for the real economy strongly affected by COVID-19.  Luxembourg recently adopted the law of 3 April 2020 on the provision of aid to undertakings in temporary financial difficulties and the law of 18 April 2020 on the guarantee regime for the Luxembourg economy in the course of the COVID-19 outbreak. 

The EUR 300 million financial aid scheme makes directly available repayable financial aid of up to EUR 500,000 per undertaking active in trade, craft or industry as well as for liberal professionals.

The EUR 2.5 billion loan guarantee scheme provides guarantees for bank loans lent by Luxembourg credit institutions to undertakings of all sectors, except holding and real estate companies.

Both schemes required prior clearance from the EU Commission. Despite some overlapping in terms of beneficiaries, both schemes provide completely different financial support. The Aid Scheme is a payment supposed to be paid out quickly and directly, but is capped at EUR 500,000 per beneficiary. The Loan Guarantee Scheme however is supporting the economy indirectly, with the aim to incentivise credit institutions to continue to grant loans to Luxembourg borrowers.

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Beate Dünschede
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