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Eurofound's EU PolicyWatch collates information on the responses of government and social partners to the COVID-19 crisis, the war in Ukraine, rising inflation, as well as gathering examples of company practices aimed at mitigating the social and economic impacts.

Factsheet for measure CY-2021-20/1939 – measures in Cyprus

State guarantees for credit institutions for loan granting to enterprises and self-employed

Νόμος που προβλέπει περί της έκδοσης κυβερνητικών εγγυήσεων προς πιστωτικά ιδρύματα για την παραχώρηση δανείων σε επιχειρήσεις και αυτοτελώς εργαζομένους

Country Cyprus , applies nationwide
Time period Temporary, 12 May 2021 – 31 December 2021
Context COVID-19, European Semester
Type Legislations or other statutory regulations
Category Supporting businesses to stay afloat
– Access to finance
Author Loucas Antoniou (INEK) and Eurofound
Measure added 07 July 2021 (updated 15 July 2021)

Background information

The measure provides governmental guarantees to credit institutions for the purpose of granting new low-cost loans to enterprises and self-employed people. The aim of the measure is to inject liquidity in the economy including the covering of investments within the Republic and the working capital requirement rather than covering the payment of existing credit facilities of enterprises. The measure is regulated by the Law for the Issuance of State Guarantees to Credit Institutions for the Granting of Loans to Enterprises and Self-employed Persons (L. 110(1)2021). The Law is subjected to the provisions of the Communication of the European Commission and the European Commission's Directorate-General Competition Department.

Content of measure

Beneficiaries of the measure are self-employed people and enterprises, which were not considered as ‘undertakings in difficulty’ on 31 December 2019 in order to only confront financial difficulties that are due to the COVID-19 pandemic. Additionally, tax obligations of the applicants to the Republic shall be settled during the application process. Also, the eligible enterprises and self-employed do not dismiss members of their staff from the period begging on the date of the issuance of the Law and six months thereafter the loan is granted.

Government guarantees are granted for the benefit of credit institutions. They cover losses that may arising from loans to be granted in accordance with the provisions of this Law, with a specified maximum limit of loss coverage in the amount of seventy percent ( for the Republic and thirty percent for credit institutions for new loans. In addition, enterprises and self-employed persons are obliged to mortgage as collateral for the loan any other unmortgaged real estate or other assets they own.

The maximum amount of government guarantee that may be granted to a credit institution for loans to enterprises and self-employed persons shall not exceed twenty-five percent of the total primary and secondary capital as of the 31 December 2020.

The total available budget for credit institutions is €1 billion from which:

  • €300,000 is available for self-employed and very small enterprises,
  • €550,000 is available for small and medium-sized enterprises, and
  • €50,000 for large enterprises.

Use of measure

The number of beneficiaries of the measure is currently unavailable as the measure is still running.

Target groups

Workers Businesses Citizens
Does not apply to workers Applies to all businesses Does not apply to citizens

Actors and funding

Actors Funding
National government
European Funds
Local funds
National Recovery and Resilience Facility

Social partners

Social partners' role in designing the measure and form of involvement:

Trade unions Employers' organisations
Role No involvement Informed
Form Not applicable Not applicable

Social partners' role in the implementation, monitoring and assessment phase:

  • No involvement
  • Main level of involvement: Peak or cross-sectoral level


The bill for the state guarantees was first introduced by the government to the House of Representatives (HoR) in May 2020, which given rise to much reactions from the opposition parties and a long-lasting public debate. Concerns for the control, transparency, the amount and the distribution of the amount among small, medium and large enterprises of the state guarantees have been raised by the Parliamentary Budgetary Control Committee and the political parties. On the other hand, the employers´ organizations warned that the delate of the adoption of the bill and its degeneration of from its original form through amendments will be meaningless. Almost a year later (April 2021), the critics and and the intense pressure of the business world to the government but the political parties as well, government and the HoR agreed to amendments and adopted the bill.

Views and reactions

Despite that the adoption of the bill was supported and has been welcomed by the employers’ organization, some economic analysts foreseen the negative reaction of the European Commission on the amendments that have occurred, questioned the use of the timeframe for the implementation of the guarantees and disagreed with the logic of the distribution of the amount among the enterprises.


  • 12 May 2021: Νόμος που προβλέπει περί της έκδοσης κυβερνητικών εγγυήσεων προς πιστωτικά ιδρύματα για την παραχώρηση δανείων σε επιχειρήσεις και αυτοτελώς εργαζομένους (
  • 14 July 2021: Κρατικές εγγυήσεις ΚΕΒΕ-ΠΕΟ (
  • 14 July 2021: Στον αέρα οι κρατικές εγγυήσεις (


Eurofound (2021), State guarantees for credit institutions for loan granting to enterprises and self-employed, measure CY-2021-20/1939 (measures in Cyprus), EU PolicyWatch, Dublin,


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Disclaimer: This information has not been subject to the full Eurofound evaluation, editorial and publication process.