What is an urgent cash loan

Covid-19: Financing

The article offers a compact overview of questions that are important for financing and legal measures (such as loan deferrals) issued in the context of the Covid-19 crisis, as well as support offers from the public sector.


Answer questions

The following remarks only deal with the position of entrepreneurs, without going into particularities for consumers.

Can a bank stop and refuse the use of existing overdrafts, current account lines and other loans?

Both in the area of ​​the application of the general terms and conditions as well as the individually negotiated contracts, depending on the extent to which the borrower is affected and his general financial situation, the lender can successfully appeal to a right to refuse disbursement.

According to § 991 ABGB, the lender can refuse to pay out the loan amount if circumstances arise after the conclusion of the contract that show a deterioration in the borrower's financial position or a devaluation of conditional collateral to such an extent that the repayment of the loan or the payment of the interest itself are Realization of the collateral are at risk. Section 26 of the general terms and conditions of credit institutions also contains an essentially identical provision (each credit institution has its own general terms and conditions, which, however, largely override the passages relevant here.).

Under individually negotiated large credit lines, which in Europe are typically based on recommendations from the Loan Market Association, the lender is only obliged to pay out a requested amount if there is no "termination" (typically defined as (i) a reason for termination or (ii) events or Circumstances that would constitute grounds for termination (after a grace period, with notification or with making a determination or a combination of the above) exists and the repeated promises are correct. This typically also includes the promise that no material adverse change has occurred, which typically also includes an offense (the formulations are typically negotiated individually and therefore also differ greatly from one another), as a result of which the economic or financial situation of the borrower worsens or worsens significantly threatens to deteriorate or a substantial part of the assets of the borrower is significantly impaired in their value or threatens to be.

Can a bank request a change in credit terms?

In the scope of the General Terms and Conditions, banks have the right to amend: A bank can charge fees for ongoing services (including debit and credit interest on current or other accounts, account management fees, etc.) in business with entrepreneurs, taking into account all the circumstances (in particular changes to the statutory Framework conditions, changes in the money or capital market, changes in refinancing costs, changes in personnel and material costs, changes in the consumer price index, etc.) at reasonable discretion (Z 43). Furthermore, if circumstances arise or become known in business relationships with entrepreneurs that justify an increased risk assessment, a bank can request the creation or strengthening of collateral within a reasonable period of time. This is particularly the case if the customer's economic circumstances have changed adversely or threaten to change or the existing collateral has deteriorated in value or is threatened with deterioration (Z 48).

Individually negotiated contracts usually do not provide any rights for the lender to change the terms of the loan (in particular the applicable margin or a right to request further collateral). This applies in any case if the borrower keeps all promises and obligations. In the event of a breach of commitments and / or obligations, there is usually a reason for termination and the lender is often only granted a waiver if the borrower agrees to changes.

Can a bank terminate a loan agreement?

According to Section 986 (2) ABGB, a loan agreement concluded for an indefinite period (this also includes overdrafts or current account lines "until further notice") can be terminated by either party (therefore, both the bank and the borrower) with a one-month notice period. The General Terms and Conditions (Item 23) repeat this rule.

A loan agreement concluded for a certain period ends when the time expires (no possibility of "ordinary" termination, unless otherwise agreed in the legal framework of § 990 ABGB).

Each party to the contract (therefore, both the borrower and the lender) can terminate a loan agreement at any time without observing a period of notice if it is unreasonable for them to maintain the contract for important reasons. According to the General Terms and Conditions (Z 24), there is an important reason that entitles a credit institution to terminate immediately, in particular if:

  • a deterioration or endangerment of the financial circumstances of the customer or a co-obligated party (e.g. surety, guarantor or a person ordering security) occurs and the fulfillment of liabilities to the credit institution is thereby endangered;
  • the borrower has given incorrect information about significant parts of his financial circumstances (assets and liabilities) or other essential circumstances in material matters and the credit institution would not have concluded the contract had it known the true financial circumstances or circumstances; or
  • the borrower has not or is unable to meet the obligation to provide or increase collateral, and there is therefore a considerably increased risk that the payer will not be able to meet his payment obligations. Such a considerably increased risk exists in particular in the case of imminent or already existing insolvency.

Are there information obligations?

Loan agreements often contain information obligations on the part of the borrower. We recommend borrowers to check whether the current situation or measures to cope with the current situation (e.g. short-time work, plant closures or production restrictions) trigger such information obligations. If agreed information obligations are not fulfilled, this can constitute a reason for termination.

Furthermore, borrowers should check whether they can and will be able to achieve agreed financial ratios in the current situation with regard to possible negative influences on liquidity or the general business situation. To this end, borrowers should also check whether there are agreed healing options (for example through an equity contribution). Financial metrics can also be suspended for agreed periods of time. An (imminent) breach of financial metrics can constitute a reason for termination if there is no cure or a suspension is agreed.

Loan agreements often also contain guarantee commitments, which may also be considered repeatedly given on an ongoing basis. Borrowers should check whether they can continue to make agreed warranty commitments as correct in changed circumstances. Inapplicable warranty commitments can constitute grounds for termination. This also applies mutatis mutandis to ongoing behavioral commitments (e.g. no other borrowing, no collateral provision (negative pledge), etc.).

Are there exceptions to the legal transaction fee and for judicial registration fees?

Legal transactions relating to measures to cope with the Covid-19 crisis are exempt from the legal transaction fee according to the 1957 Fees Act. The legislator primarily thought of guarantees, but this exception also includes typical financing transactions and hedging transactions, such as assignments or bills of exchange.

Lien entries to secure loans, which are taken out solely to maintain solvency and to bridge liquidity problems of companies in connection with the Covid-19 pandemic and the economic effects caused by it, are excluded from court fees (registration fee of 1.2% of the secured amount) exempted, provided that the application for which the entry is sought arrives at the court before July 1, 2020. The connection with the Covid-19 pandemic must be certified, for example by submitting collateral (correct: confirmation?) From Austria Wirtschaftsservice GmbH (AWS) or Österreichische Hotel- und Tourismusbank GmbH (ÖHT) or in any other suitable manner.

Are there any simplifications regarding notarial certification?

In principle, Austrian notaries are free to keep their offices open and are not covered by current operating bans. We know from practice that there are enough notaries available and, at least in urgent cases, that appointments are made.

The notarial regulations have now been adapted, which allows notaries to draw up public documents (such as notarial acts and certifications) using an electronic means of communication. For this, an electronic communication option through an optical and acoustic two-way connection is uninterrupted and required for as long as the notary can clearly and completely follow the process of adding the manual signature or the electronic signature.

Is there an extraordinary deferral of loan installments?

As an exception, the following statements only include consumer and Micro business and only apply to Loan agreements that were made before March 15, 2020 have been completed. Micro-enterprises are companies that employ fewer than ten people and whose annual turnover / annual balance sheet does not exceed EUR 2 million.

Claims of the lender for repayment, interest payments or principal payments that are due between April 1, 2020 and January 31, 2021 are deferred for a period of ten months when the due date occurs, if the borrower is due to the spread of COVID-19 - The exceptional circumstances caused by the pandemic have lost income, which means that the provision of the owed service is unreasonable for him. This is particularly the case when his decent livelihood (including the livelihood of dependents) is at risk. Such deferred claims are not in default.

However, the borrower is free, if financially possible, to service the loan in accordance with the contract. In addition, the legislature has also made it clear that lenders and borrowers are of course free to mutually agree to other agreements. Terminations by the lender due to default in payment or a significant deterioration in the borrower's financial situation are excluded until the deferral has expired. The borrower may not deviate from this at the expense of the borrower.

The lenders are instructed by the legislature to offer the borrowers discussions for amicable solutions (also by means of distance communication). If an amicable settlement for the period after January 31, 2021 does not come about, the contract term will be extended by ten months and the respective due date of the contractual services will be postponed by this period.

Lenders must provide the borrowers with new versions of the loan agreements that have been amended by law or by mutual agreement.

It is important that this only constitutes a deferral of repayment, interest or principal payments, but does not lead to a loss of the lender's right to interest or other fees. These continue to apply for the deferral period and thus increase the amount to be repaid.

Companies that are not micro-enterprises are not covered by the measures listed above and must separately find amicable solutions with their lenders.

Are there special regulations if you are in default with a contractual service or for contractual penalties?

In addition, the legislature has also enacted general provisions (independent of loan and credit agreements) in the event that a contracting party is in default with its performance.

If, in the case of a contractual relationship entered into before April 1, 2020, the debtor does not pay, or not fully, a payment that is due in the period from April 1, 2020 to June 30, 2020, because his economic If performance is significantly impaired, no more than the statutory interest (4% pa) is due for this payment arrears regardless of deviating contractual agreements and there is also no obligation to reimburse the costs of extrajudicial collection or collection measures. Likewise, under the circumstances outlined above, the party in default is not obliged to pay any agreed (also no-fault) contractual penalty (penalty).

Are there any special things to consider when injecting liquidity into a company in the form of a shareholder loan?

In principle, the provisions of the Equity Replacement Act always apply to shareholder loans (EKEG) must be observed. This covers loans that are granted by a partner to a corporation (GmbH, AG or SE), a cooperative with limited liability or a partnership in which no partner with unlimited liability is a natural person that is in a crisis. Shareholders within the meaning of the EKEG are in particular anyone who directly holds 25% or more of the shares. A crisis exists if the conditions for opening insolvency proceedings or corporate reorganization proceedings against the company's assets are met.

The main legal consequence is that the repayment of such loans is blocked until a crisis no longer exists. The block also applies to the assertion of claims for compensation against the company if the shareholder grants a security for a liability of the company to a third party during the crisis and claims are made therefrom.

The legislature now excludes loans from the scope of the EKEG, provided that a cash loan is granted and added for no more than 120 days by the end of January 31, 2021 and the company does not provide a pledge or comparable security from its assets for such a loan .

Support offers from the public sector

Corona aid fund / COFAG


Financial support is handled by the COVID-19 Federal Financing Agency (COFAG), the legal regulation is based on the federal law on the establishment of a federal mining company (ABBAG law). COFAG is equipped by the federal government in such a way that it can assume / provide loan guarantees, direct loans and / or grants totaling up to EUR 15 billion.

Support from COFAG is available for companies and industries that are particularly affected by measures such as entry bans, travel restrictions or assembly restrictions and that have liquidity problems. In addition, the Corona aid fund helps companies that are confronted with major losses in sales and the endangerment of their business basis as a result of the Corona crisis.

The Federal Minister of Finance has to issue guidelines in compliance with the requirements of EU state aid law, in particular to determine the group of beneficiary companies, the structure and purpose of the financial measures, the amount of the financial measures and the duration of the financial measures. See the questions and answers on the website of the Federal Ministry of Finance: https://www.bmf.gv.at/public/top-themen/corona-hilfspaket-faq.html (section "The Corona Aid Fund").

On the part of a company exists no legal claim for financial support.

Loan guarantees and direct loans

The first regulation, which regulates guidelines for the granting of financial measures in the form of loan guarantees and direct loans, was issued on April 9th, 2020 and has been in force since April 10th, 2020. For more details on the support measures by COFAG, in particular their prerequisites, terms and conditions, please see our article on subsidies and state aid law.

Loan guarantees are to be applied for through the house bank. Depending on the company, these are then forwarded to Oesterreichische Kontrollbank AG (large companies), Austria Wirtschaftsservice GmbH (small and medium-sized businesses) or Österreichische Hotel- und Tourismusbank GmbH (tourism companies) and processed with COFAG. A Applications have been possible since April 8, 2020.


Non-repayable grants are granted to cover fixed costs for companies in the Corona crisis. The application for the grant of a fixed cost subsidy can be submitted via FinanzOnline. The payment is made via the house bank in coordination with AWS. For the requirements and scope see: https://www.bmf.gv.at/public/top-themen/corona-hilfspaket-faq.html (section "The Corona Aid Fund" / "Subsidies") and: https: // www .fixkostenzuschuss.at /. For companies that are relevant to the location, there is the possibility of a location securing subsidy in the form of a subordinated loan, which can be converted into a non-repayable subsidy. More details on the granting of financial measures in the form of grants are regulated by the Federal Minister of Finance in separate ordinances with the associated guidelines (see the references to the guidelines on fixed cost subsidies and the guidelines on site security subsidies at: https://www.cofag.at/ basics.html).

Covid-19 KRR

The federal government has set up a EUR 3 billion program through the OeKB within the framework of the existing Export Promotion Act (AFG) to support the liquidity of Austrian export companies. These funds are made available via the new "Covid-19" KRR product in the form of working capital loans amounting to 10% (large companies) or 15% (SMEs) of export sales. Up to EUR 60 million per company group for an initial period of up to 2 years with the option of renewal. The prerequisite is an existing export activity and proof that the company was economically sound until the start of the COVID-19 effects in Austria. For the granting, it is irrelevant whether the company already has customer status with OeKB or whether existing credit lines have already been fully used.

OeKB's condition for granting COVID-19 KRR is, among other things, distribution and withdrawal restrictions. During the term of the OeKB guarantee, no withdrawals or profit distributions of more than 50% of the (positive) result after taxes of the last financial year may be carried out.

As with all other OeKB financing, applications must be submitted to OeKB via the house bank.

Other bridging funding or other support

For further support offers, see our article on subsidies and state aid law and on subsidies in Lockdown 2.0

as well as at https://www.wko.at/service/faq-coronavirus-infos.html#heading_Kompensation

Your contact person:

Tibor Varga
Partner and head of the Financing Practice Group
T + 43-1-533 4795-28
[email protected]