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Newsletter - COVID-19: Loan and guarantee arrangement for Norwegian businesses from the Norwegian government

The Norwegian government and Parliament has resolved temporary measures in order to mitigate the effects of the current Covid19 situation with respect to the financing of Norwegian industry and commerce.


On 12 March 2020, Norges Bank (the Central Bank of Norway) announced that it reduced its policy rate by 0.5 percent to 1 percent. Norges Bank also reduced the capital buffer for banks from 2.5 to 1 percent. Both measures were passed in order to make lending banks reduce their interest rates on loans to borrowers. 

The reductions in policy rate and buffer requirements lead to announcements from most major Norwegian banks that interest rates will be reduced by up to 0.35 percent on loans, effective around 1 May 2020. 

On 20 March 2020, Norges Bank announced a further reduction in the policy rate by 0.75 percent to 0.25 percent, which is the lowest level ever seen in Norway. The Parliament has urged the banks to reduce its interest rates.


On 15 March 2020, the Norwegian government announced that it will propose two new financing measures in order for enterprises affected by the corona crisis to be able to obtain liquidity financing. The announcement was followed up by a proposal to the Parliament on 20 March 2020 (Prop. 58 LS (2019-2020)), and passed by the Parliament on 21 March 2020.

Firstly, there will be a state guarantee scheme directed to new bank loans to small and medium sized enterprises, in the first instance up to a total of NOK 50 billion. The amount may be increased. The scheme will be applicable only to new loans extended because of sudden lack of liquidity, and until 1 June 2020. The guarantee will cover 90 percent of the loan to each borrower, which reduces the risk for the bank that extends the loan and bear the remaining 10 percent of the risk. The loans to each entity cannot exceed the borrower’s cost of wages in 2019 multiplied by two or 25 percent of the borrower’s aggregate turnover in 2019, and are in any event limited to NOK 50 million and with a maximum term of 3 years. The banks that extend the loans shall base the credit on normal credit assessments and only lend to enterprises expected to be profitable under normal market conditions. Loans may not be extended to borrowers being in financial difficulties by the end of 2019. The ministry may be expected to issue secondary legislation with further conditions for the guaranteed loans, including payment of a guarantee premium. 

Secondly, the government will reestablish the State Bond Fund with a capital of NOK 50 billion, aimed at financing bonds issued by the larger enterprises with center of main interests in Norway. Investments in the bonds must be done at market price. Such fund shall be administrated by Folketrygdfondet (the Norwegian Pension Fund Norway). The ministry may be expected to issue secondary legislation with further conditions for the investments in bonds. 

The above-mentioned proposals were resolved by the Parliament on Saturday 21 March 2020.


Passenger fees are waived from 1 January 2020 and until 31 October 2020. Airport charges does not apply until 1 June 2020. 

The Norwegian Parliament has resolved a governmental loan guarantee in the amount of NOK 6 billion for loans to airlines with a Norwegian operating license. One half of the amount, NOK 3 billion, will be aimed at Norwegian Air Shuttle (NAS), NOK 1.5 billion at SAS and the remaining NOK 1.5 billion at Widerøe and other airlines.

The guarantee scheme will be administered by Garantiinstituttet for Eksportkreditt (GIEK). The Norwegian state will provide 90 percent of the guarantee for a loan, provided external banks, credit institutions and other commercial parties provide the remaining 10 percent. There will be conditions of financial strength in order to benefit from the guarantee. For airlines which did not have equity of at least 8 percent at the end of the last financial quarter before the Covid19 crisis, its financial creditors must waive interest and postpone instalments for three months before the airline may benefit from the guarantee. Such airlines must also carry out measures in order to further strengthen its balance sheet. According to the government, SAS and Widerøe fulfil the equity requirements.

For NAS the government will provide an immediate facility of NOK 300 million. If and when Norwegian obtains relief by way of less interest and instalment requirements from its creditors, the government will provide an additional guarantee amount of NOK 1.2 billion. The remaining NOK 1.5 billion will be at the disposal of Norwegian when it has strengthened its solidity to an acceptable level. The government has expressed that shareholders and lenders to Norwegian must contribute to a better financial situation for the airline if the Norwegian state shall provide the guarantee. 

The guarantee scheme constitutes state aid within the meaning of Article 61(1) of the EEA Agreement and is notifiable to the EFTA Surveillance Authority ESA in Brussels.  There has likely been informal discussions between the Norwegian government and ESA during the last couple of weeks on this and other aid measures to mitigate the effects of the COVID-19 outbreak. The European Commission has already categorized the COVID-19 outbreak as exceptional occurrences within the meaning of article 61(2)b of the EEA Agreement. Several aid schemes has lately been appreoved in Brussels in favour of European industires. For an update on the regulatory approvals of the EU institiutions related to the COVID-19 outbreak, please see this link