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EU Authorizes State-Aid Regime In Response To COVID-19

By Molly Moses · March 19, 2020, 6:45 PM EDT

The European Commission adopted measures Thursday allowing countries to help businesses stay liquid during the COVID-19 outbreak, authorizing grants of up to €800,000 ($853,000) to a company without risk of its government violating the bloc's state aid rules.

The first of five measures in the relief package, which allowed the direct grants to address a company's "urgent liquidity needs," was an increase from the €500,000 the commission had promised Tuesday. It allows subsidies in the form of deferred tax payments and public guarantees.

The second measure allowed governments to guarantee loans to ensure banks keep providing them to customers, and the third allowed them to grant companies loans with favorable interest rates.

A fourth measure was a safeguard for banks that channel aid to businesses — especially small and midsized companies. It said that aid to increase banks' lending capabilities is considered direct aid to customers and not to the banks themselves. 

The final measure introduced more flexibility for countries seeking to provide short-term export credit insurance.

--Editing by Tim Ruel.

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