Guarantees are financial instruments that demonstrate high efficiency both during economic growth and in the face of slump and crisis. This has been confirmed over the years of operation of BGK’s guarantees in the Polish market. The Bank provides a particularly broad range of loan repayment guarantees for small and medium-sized enterprises (SMEs). Thanks to the government’s activities undertaken in cooperation with BGK, guarantees for SMEs have become a fixed element of the system of financing Polish entrepreneurs and a form of support well recognised by them.

BGK’s guarantees for SMEs are provided under the “Supporting Entrepreneurship through BGK Sureties and Guarantees” programme. The main objective of the programme is to ensure the widest possible use of guarantees and sureties.

This objective is mainly pursued by providing so-called “portfolio guarantees and sureties” that secure portfolios of loans advanced by financial institutions. Such form of distribution of financial instruments is the most effective and preferred by banks, other financial institutions, and entrepreneurs to for securing the risk of financing and implementing projects aimed at ensuring growth of micro, small and medium-sized enterprises.

The programme is implemented by domestic (commercial and cooperative) banks and financial institutions, which provide funding to enterprises backed by BGK’s guarantees.

The programme objectives are achieved in particular by:

  • de minimis guarantees,
  • COSME guarantees,
  • Biznesmax guarantees,
  • Creative Europe guarantees,
  • guarantees from the Agricultural Guarantee Fund (AGF).

The year 2020, marked by the COVID-19 pandemic, was a challenge for entrepreneurs and the role of BGK’s guarantees, which were intended to mitigate the effects of the crisis caused by the pandemic. The unprecedented conditions faced by entrepreneurs prompted BGK to apply special solutions for entrepreneurs related to guarantees. The Liquidity Guarantee Fund (LG Fund) was established at BGK primarily to help maintain the financial liquidity of enterprises.

The LG Fund was used to finance new guarantee products:

  • Guarantee from the Liquidity Guarantee Fund,
  • Factoring guarantee from the Liquidity Guarantee Fund.

Moreover, to provide comprehensive support for the financial liquidity of enterprises during the pandemic, virtually every guarantee product that existed previously was changed and offered on even more favourable terms.

De minimis guarantees

The guarantee has been available for the longest time in the Polish market (since March 2013) and is an excellent example of effective, real support for enterprises.

In 2020, due to their recognition and wide usage in the Polish banking system, de minimis guarantees were the first products to offer aid to SMEs.

The changes in effect as of 1 March 2020 consisted in increasing the maximum collateral from 60% to 80% of the loan amount. BGK waived its commission on the provision of guarantees until 31 December 2020, which was previously at 0.5%, and extended working capital facility guarantee term from 27 to 39 months.

Following further work carried out in 2020 to improve the de minimis guarantee, the above parameters of the guarantee were changed: the application of the previously agreed changes was extended until 31 December 2021 and further changes were made, which are effective from 1 January 2021 to 31 December 2021, i.e.: the maximum guarantee amount was increased from PLN 3.5 million to EUR 1.5 million for a guarantee up to five years and EUR 750 thousand for a guarantee for longer than five years, the guarantee term was extended to 75 months for a working capital loan, while for an investment loan the guarantee term was extended to 120 months.

As a result of the change of parameters, but above all due to the recognition of the de minimis guarantee as an effective support instrument, record-high sales of the de minimis guarantees were recorded. In 2020, 67,922 guarantees were granted for PLN 23.6 billion, which contributed to the amount of provided financing of PLN 33.7 billion. As at 31 December 2020, 386,505 guarantees worth more than PLN 90 billion had been granted since the beginning of the de minimis guarantee scheme.

The positive effects of the de minimis guarantee scheme are confirmed by annual surveys based on information provided by enterprises. The 2020 survey was specific, because interviews were made already during the COVID-19 crisis*.

The results of the survey confirm that de minimis guarantees enable enterprises to take out loans – 52% of the surveyed enterprises stated that without the guarantee they would not have been able to receive any loan, and according to 21% of them the terms of the obtained loan would have been worse.

Moreover, the funding obtained thanks to the guarantee helped stabilise their financial situation (76%), maintain or increase employment (it is estimated that 184 thousand jobs were preserved and 125 thousand were created), and generate the resources needed for development, consolidation of the market position (28% of respondents), exploiting use the potential of market advantage, and even expand business into foreign markets (58% of the surveyed companies started or intend to start export activities thanks to the funding received with the guarantee). Almost a half of respondents stated that financing guaranteed under the scheme helped them survive the crisis connected with the pandemic to a very large or large extent.

* Outcomes of the de minimis guarantee scheme. Report on 2020 survey, BGK.

PGF COSME guarantees

The COSME portfolio guarantees with the counter-guarantee of the European Investment Fund are complementary to the aid guarantees. These guarantees are granted on arm’s length terms, without affecting the aid limit, including the limit of de minimis aid, which is particularly important as enterprises widely use various forms of offered support subject to de minimis aid rules.

COSME guarantees are provided under the EU COSME Programme and the European Fund for Strategic Investment (EFSI) established under the Investment Plan for Europe. The EFSI is intended to support financing and implementation of production investments in the European Union and to provide better access to finance. BGK was the first bank in Europe to sign a COSME agreement (2015) with the EIF under the European Fund for Strategic Investment (the so-called Juncker Plan).

COSME guarantees are provided with the formal requirements that an enterprise must meet to obtain funding secured by this guarantee reduced to a minimum, i.e. apart from the fact that it is not necessary to verify the utilisation of aid limits as referred to above, there are no sectoral limits, i.e. guarantees are offered regardless of the type of the conducted business activity (except for restricted sectors in accordance with EU and national legislation). The COSME guarantee also eliminates the need to create any security on assets of the enterprise.

All of this makes this guarantee very popular among enterprises, therefore changes that would further increase its popularity, to be introduced for the time of the pandemic, had to be made. On 30 July 2020, an amended counter-guarantee agreement was signed with the EIF, which as of 6 April 2020 introduced more favourable terms of guarantees for the repayment of loans to finance day-to-day activities of SMEs. BGK’s commission was reduced from 1% to 0.7%, the guarantee term was extended from 27 to 39 months and the period for the repayment of a revolving credit facility was extended from 5 to 9 years.

In 2020, 5,870 guarantees were granted for PLN 1,003 million, which contributed to the amount of provided financing of PLN 1,253 million. As at 31 December 2020, 31,445 guarantees worth more than PLN 5.4 billion had been granted since the beginning of the COSME guarantee scheme.

Biznesmax guarantee

The guarantee for innovative enterprises and green projects is a specific offer focusing on the growth of enterprises, on the quality of their services and products, technological improvements that facilitate the achievement of objectives, building environmental and climate change awareness by facilitating the acquisition of funding needed to implement related projects. This product which is unique on a European scale requires ambitious solutions, which is why the Biznesmax guarantee stands out from other guarantees. Apart from securing a loan, the enterprise that uses the guaranteed loan correctly may receive a subsidy that reimburses the interest paid.

Although it imposes greater operational burden on lending banks, the guarantee attracts significant interest from banks and enterprises. The increased interest in the guarantee resulted not only from its attractiveness. A very intensive training and education campaign carried out by our Bank proved equally important. Building awareness of the advantages of the guarantee and support in its implementation resulted in a strong growth of its sales in the previous year. Out of 493 guarantees provided cumulatively as at 31 December 2020, totalling PLN 996 million, as many as 365 guarantees worth PLN 733 million were issued in 2020.

This also resulted from changes in the rules of granting the Biznesmax guarantee introduced for the period of special measures counteracting the effects of COVID-19. The changes focus on facilitating access to financing of ongoing activities. It was made possible to apply a guarantee to working capital facilities, without any requirements related to the project carried out or a catalogue of eligible costs. The effective period for the 5% annual rate for the calculation of loan interest subsidy was extended and, what is very important, the interest subsidy system was extended to also cover revolving and non-revolving working capital facilities.

The main outcomes of the Biznesmax guarantee scheme resulting from the completed evaluation programme are as follows:

  • 28% of respondents would have not obtained the loan amount that they received with the Biznesmax guarantee;
  • 59% of respondents acknowledged that thanks to such support their company could carry out planned investments during the pandemic;
  • 49% of companies avoided or reduced layoffs thanks to a loan with the Biznesmax guarantee;
  • 47% of the companies surveyed maintained liquidity thanks to the received support.

*Outcomes of the “Biznesmax subsidised guarantee scheme” in 2020, BGK.

Creative Europe guarantee

This is another guarantee with the counter-guarantee of the European Investment Fund. It is provided as part of the EU programme Creative Europe and is based on the European Fund for Strategic Investments (EFSI). The guarantee is intended to fulfil a specific mission – support entities from the creative and cultural sectors. They face particular difficulties from financial institutions in obtaining debt financing. This mainly results from the specific nature of their business, which is often unique, prototype and innovative, while their asset structure is characterised by a large share of intangible assets. From the point of view of lending banks, such assets do not constitute attractive collateral as they are unique and cannot be readily disposed of compared to typical tangible collateral. In addition, creative and cultural actors have irregular sources of income and their operations are based on projects whose value is difficult to assess. The lack of external funding limits their development, innovation and competitiveness. Creative Europe guarantees are a response to the unavailability of adequate collateral and a clear message that BGK also takes up such difficult challenges as supporting demanding niche industries by establishing a dedicated support instrument. BGK breaks barriers and stereotypes among both financing banks, which avoid non-standard transactions, and enterprises which are not fluent in financial matters, but can boast of creativity and provide the public with intangible services. As a niche product, this guarantee is very difficult to be used on a mass scale, but numerous activities undertaken by BGK, including the provision of training to banks, extension of the range of business activities according to the Polish Classification of Business Activity that are eligible to receive the guarantee, or waiver of the guarantee fee, are aimed at stimulating sales growth, despite the restrictions in place at some lending banks regarding cooperation with companies from these industries, which were most affected by the trade restrictions imposed for the duration of the pandemic.

Guarantee from the Agricultural Guarantee Fund (AGF)

The AGF guarantee supports agricultural holdings and agri-food processing establishments that fall under the SME definition. The AGF is the first BGK guarantee fund in the Polish market available for the entire agricultural sector. Beneficiaries of the guarantee also include producers in the primary agricultural production sector and processors of, or entities marketing, both agricultural and non-agricultural products indirectly linked to an agricultural product. The initiative is implemented as part of the Rural Development Programme (RDP).

The guarantee is also the first repayable instrument used as part of the RDP on such a large scale. What’s important, obtaining a loan with BGK’s repayment guarantee is easier than obtaining a grant under the Rural Development Programme. The decision-making process is also faster. The call for applications is not limited in time and entities may apply for the guarantee on a continuous basis. There is no need to carry out a project evaluation. In addition, the repayment guarantee covers loans relating to all areas of agricultural production, irrespective of the economic size of the agricultural holdings. This is one of the newer products offered by BGK, as it was launched in 2019. Promoting the development of the agricultural sector is a good example of the Bank’s care for balancing opportunities between business sectors and rural areas relative to other areas. At the same time, the repayable nature of the instrument breaks barriers in the agricultural sector regarding financing based on external capital, and not only based on own funds or grants. On the other hand, institutions financing the activities of agricultural holdings, with such a high level of good and liquid collateral, are more willing to invest their funds in projects related to their activities. Both sides learn from each other and gain experience regarding the quality of cooperation and build trust for the years to come.

For the duration of the COVID-19 pandemic, additional facilities were introduced in connection with the AGF guarantee. The changes made it possible to provide the AGF guarantee for working capital facilities financing day-to-day operations, which are not related to a project carried out by the borrower under the Rural Development Programme, with a maximum guarantee term of 39 months (revolving credit facilities) and 51 months (non-revolving credit facilities).

In addition, the facilities were subject to an interest subsidy. The interest subsidy is effective for up to 12 months counted from the date of first drawdown under the facility covered by the AGF guarantee and is paid at the rate of 2 percentage points per annum. Out of PLN 266 million of AGF guarantees issued as at 31 December 2020, PLN 259 million was provided in 2020 alone. In total, as at 31 December 2020 1,670 guarantees had been provided since the beginning of the AGF guarantee scheme.

Guarantee from the Liquidity Guarantee Fund (LG Fund)

The LG Fund guarantee was created with medium-sized and large enterprises in mind. The pace of development and deployment of this entirely new guarantee product was impressive, as the guarantee became an active product as soon as at the beginning of the pandemic, which is particularly worth noting, given that a completely new segment of end users was included in BGK’s portfolio guarantee system, i.e. large companies, a completely new Fund was established – i.e. the LG Fund, which is the source of funding for expenditure related to the LG Fund guarantee, and the European Commission’s approval of this product was obtained. The guarantee is a proof of a very successful partnership cooperation within BGK and with external stakeholders, including the Ministry of Finance and the Office for Competition and Consumer Protection (UOKiK). The objective of guarantees provided from the LG Fund is to secure financial liquidity of Polish companies and, as a result, maintain their market presence and employment. The guarantee may cover both new and renewed working capital facilities. The guarantee may be applied to credit facilities for which agreements were executed not earlier than on 1 March 2020 and may cover up to 80% of the principal. The maximum guarantee amount may not exceed PLN 200.00 million and the total amount of guaranteed loans granted to the borrower may not be higher than PLN 250.00 million. The guarantee term may be up to 27 months, but not longer than the loan term extended by no more than three months. To increase the availability of the guarantee from the LG Fund, in June 2020 it was made possible apply the guarantee to foreign currency loans and the requirement of the minimum guarantee amount was waived (originally the minimum amount was PLN 3.5 million).

PLN billion
total amount of guarantees, which was a significant achievement after a few months of product operation, bringing tangible benefits for the economy

As at 31.12.2020 

Factoring guarantee from the Liquidity Guarantee Fund (LG Fund)

In September 2020, the Bank began offering guarantees of repayment of factoring limits financed from the LG Fund, which were granted to enterprises falling within the SME definition or to large companies.

Once again, BGK proved to be the leader among other financial institutions in the European Union and a precursor of solutions. This product has no counterpart in the EU and is the first factoring guarantee product notified by the European Commission.

The guarantee may cover factoring with recourse and reverse factoring. The guarantee may be applied to factoring limits for which agreements were executed not earlier than on 1 March 2020.

The guarantee may cover up to 80% of the factoring limit. The maximum guarantee amount may not exceed PLN 200.00 million and the total amount of guaranteed factoring limits granted to the seller of receivables may not be higher than PLN 250.00 million.

The guarantee term may be up to 27 months, but not longer than the term of the factoring limit extended by no more than three months.

PLN million
total abount of guarantees

As at 31.12.2020

New products:

In December 2020, BGK submitted with the European Investment Fund an application for a counter-guarantee from the Pan-European Guarantee Fund backing the guarantee intended for leases. The decision-making procedure of the EIF and the European Commission was successfully completed in the first months of 2021 and the guarantee has been rolled out by lessors. The portfolio guarantee for leases supplements the existing offer of BGK’s portfolio guarantees for SMEs related to fighting the consequences of the COVID-19 pandemic. The Fund is separate initiative, independent of the EU budget, of EU Member States, which are the shareholders of the European Investment Bank. BGK’s guarantees will help generate a leasing campaign worth PLN 5.6 billion and will support entrepreneurs and the Polish economy in a difficult period of the coronavirus pandemic. The new BGK guarantees cover up to 80% of the lease amount or lease loan without interest and costs related to their granting. BGK has taken advantage of the opportunity created by the Polish government as a result of Poland’s accession to the Pan-European Guarantee Fund. With respect to this guarantee BGK also became a precursor, as it is the first development bank that uses the funds of the Pan-European Guarantee Fund in the counter-guarantee formula to offer support for business.