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The grant is an aid instrument for which the OECD rules specifying a 35% minimum grant element must be observed. The 35% grant element of the contract amount is paid during the execution period of the project in the form of a grant. The balance of 65% has to be provided in the form of commercial financing or be paid in cash.
Why opt for a grant?
Grants are chosen because:
- enterprises want to reduce their administrative burdens as much as possible;
- one of Finexpo's goals is to support SMEs that are interested in selling to the export market
Criteria for making a grant
In order to make a grant:
- the project must not be commercially viable. This means there must be no positive investment cashflow during the first ten years;
- the project must be relevant to development;
- the project must be a priority for the recipient country;
- there must be competition;
- the project must sufficiently fulfil Belgium's interests.
While for the other aid instruments, Finexpo's contribution is spread over a large number of budget years, the grant is paid in the very short term, and this immediately affects the budget of the year in which the grant is paid. This is why the use of grants is limited to small projects for which long repayment periods are not justified. The grant is not exclusive to SMEs, but is intended for small contracts up to 8,571,529 euros, meaning that a grant can be no more than 3 million euros (8,571,529 euros x 0.35).
For projects for which a grant is applied for, companies must compile a dossier on the basis of the standard questionnaire jointly drawn up by Finexpo and the Del Credere Office. The economic aspects of the project and its relevance for development can be examined on the basis of this questionnaire.
The Finexpo Committee will examine the dossier and deliver an opinion to the Minister for Foreign Trade. The minister will then decide whether or not to grant an interest rate subsidy.
The minister’s favourable decision takes the form of a promissory note, which is a document that is sent to the bank and/or the exporter and guarantees state intervention for a period of one year, twice renewable, i.e., three years altogether.
If the transaction is concluded within this three-year period, a Ministerial Decree is assigned to the exporter’s bank to formalise the granting of an interest subsidy. The grant is settled in three instalments over the project implementation period.