Czech government approves $6 billion loan aid for virus-hit firms

PRAGUE (Reuters) - The Czech government gave final approval to a nearly $6 billion (£4.94 billion) state loan guarantee scheme on Monday for up to 150,000 businesses hurt by the coronavirus outbreak, Finance Minister Alena Schillerova said.

Business has complained help has been too slow in the export-driven economy that has been hard hit by the coronavirus crisis and is heading for a sharp recession in 2020.

The new programme, called COVID III and approved by parliament and notified to the European Union, will allocate 150 billion crowns ($5.87 billion) in guarantees for commercial loans. The state said that could result in banks lending up to 495 billion crowns.

The loans will be available for businesses with up to 500 employees, with a maximum loan value of 50 million crowns.

"These (companies) need to bridge the current period until their orders and revenues rise again," Schillerova said in a Twitter post.

The loan programme is bigger than previous offers of help that saw huge demand and complaints of slow execution.

The state Czech-Moravian Guarantee and Development Bank (CMZRB) said last week that 1,500 businesses had received help worth more than 10 billion crowns by mid-May.

The government has pledged more than 1 trillion crowns, or nearly a fifth of annual economic output, to support hard-hit workers and companies, mostly through loan guarantees, in the case of the companies.

Raiffeisen economist Helena Horska has calculated that of direct aid promised of around 277 billion crowns, about a tenth has been delivered, amounting to 0.5% of gross domestic product.

(Reporting by Jason Hovet; editing by Barbara Lewis)