In the last quarter of 2024, demand for Széchenyi microloans surged dramatically, reaching almost three times the level of the previous quarter. In practical terms, this means that 7 out of 10 small businesses are actively interested in this government-supported loan, which can even facilitate investment property purchases without any issues.
The exceptionally high demand was strongly influenced by the government’s decision to reduce the annual interest rate of Széchenyi Card Program investment loans to 3.5% as of November 1, 2024.
Before this change, the annual interest rate for Széchenyi microloans stood at 5.0%. While a 1.5% reduction may not seem significant at first glance, it has sparked immense interest. One reason for this is that, prior to the rate cut, the 5.0% annual interest was almost identical to the return on investment for property purchases, making the loans less attractive to small businesses. Additionally, a few years ago, economic players were accustomed to investment loans with interest rates as low as 0.5-1.0%.
The Key Advantages of Szécsényi Microloans Compared to Market Loans.
One of the greatest advantages of Széchenyi microloans over market loans is predictability, as the interest rate remains fixed throughout the entire loan term. Additionally, compared to current market-rate loans, the interest can be up to 10 percentage points lower. Another important benefit is that the loan comes with no handling fees.
However, there is a contract signing fee equal to 1% of the loan amount, with a minimum of 200,000 HUF, and a one-time disbursement fee of 15,000 HUF.
These microloans are extremely simple and flexible to access, making them available even to businesses that might otherwise not qualify for traditional financing. Even startup businesses can apply for investment loans ranging from 1 million HUF to 100 million HUF (with a cap of 50 million HUF for startups that have not yet completed a full business year). Borrowers can repay the loan over a period of 1 to 10 years.
The grace period can be up to 24 months, or 36 months in the case of purchasing newly built real estate.
Permitted Uses of the Loan.
The loan can be used for the following purposes:
- Acquisition of intangible assets
- Construction, purchase, or development of real estate (for rental properties, the business must have rental activities listed as either a primary or secondary activity)
- Purchase of a new, fully electric passenger car, with a maximum purchase price of 25 million HUF
- However, the business’s revenue from the previous full business year must exceed the car’s gross or net purchase price, depending on whether the financing is based on net or gross value.
- Purchase of new or used tangible assets
- Consulting or expert services for development
- Working capital financing (limited to a maximum of 20% of the total loan amount)
- Purchase of small and large commercial vehicles (excluding pickup trucks and off-road vehicles)
Excluded Uses.
The loan cannot be used for:
- Commercial vehicles with a VAT amount exceeding 25 million HUF
- Quad bikes
Restricted Uses of the Microloan.
The microloan cannot be used for:
- Loan refinancing
- Financing VAT that the business is eligible to reclaim
- Purchasing assets (including real estate) from:
- Affiliated businesses
- Current or former direct or indirect owners of the borrowing business
- Close relatives of these owners
- Companies owned or partially owned by these individuals
- Entities where ownership shares cannot be clearly determined
Eligibility Criteria.
To qualify for the loan, businesses must not have any overdue loan debts or unpaid public dues. They must also meet the Szécsényi Card Program Business Regulations, specifically the conditions set in the Szécsényi Microloan MAX+framework.
Loan Repayment Terms.
- Principal repayment is linear
- Repayment can be quarterly or monthly
- For quarterly repayment, the first payment is due at the end of the calendar quarter following the grace period
- For monthly repayment, the first installment is due at the end of the month in which the grace period expires
- The final installment is due on the loan maturity date or the contract termination date (unless the financial institution specifies otherwise)
Equity Contribution Requirement.
The regulations specify a minimum equity contribution of 10% of the planned investment. This can be:
- Cash or bank deposits
- Non-repayable state subsidies (except for fully electric vehicles, where subsidies are not accepted)
- Documented expenses related to the investment, such as:
- Costs directly built into the investment
- Purchases linked to the investment (proven by invoices, purchase agreements, or certifications from a financial institution-approved technical inspector)
Expected Impact.
The microloan program is anticipated to:
- Boost investment willingness among micro and small businesses
- Stimulate economic growth
- Support businesses that would otherwise not qualify for traditional financing