With a state guarantee, the government guarantees part of the loan. In other words, if a company cannot repay the loan, the state will (partially) repay the lenders as long as the conditions of the guarantee are met. This reduces the risk for a lender and improves the company’s access to credit. In The Netherlands, October can call on 3 types of state guarantees: BMKB, BMKB-G and BMKB-C. These state guarantees are considered a strong security on a loan. Therefore, if a state guarantee can be applied, it results in a lower pricing for the borrower.

Whenever a state guarantee applies to a project, it will be indicated in the project description.

In this tutorial we go over the differences between the guarantees, when they are applied and their coverage.

To stimulate access to credit for companies in The Netherlands, the Dutch government gives a guarantee to companies that cannot provide their own strong securities on the loan, yet that do have a continuity perspective. In other words, the guarantee is not granted to financially unhealthy companies or companies that can give sufficient strong securities such as a mortgage.

The BMKB guarantee covers 90% of between 50% and 75% of the loan amount. The percentage covered depends on the size of the loan. The level of coverage is always indicated in the project description.

Something to consider: the guarantee assumes a linear capital repayment, whereas loans on October are repaid through annuities. In annuities, capital repayments are relatively small at the start and become larger towards the maturity of a loan. As a result the guarantee won't cover 67.5% (90%*75%) of the loan, but approximately up to 65%.

Below there's an example of a guaranteed loan of €100,000 with a duration of 24 months.

To align interests, the owner of the company has to give a personal guarantee on top of the state guarantee.

To stimulate the energy transition in The Netherlands, the Dutch government has created the so-called BMKB-Green as part of the BMKB programme. With the guarantee, the Dutch government covers 90% of up to 75% of your outstanding amount at any time*. The borrower itself or the borrower’s project has to qualify as contributing to the energy transition in The Netherlands. Topics that qualify are listed on the Energylist of the Dutch government which you can find on this page by the Dutch government.

*Effectively approximately up to 65% due to annuity repayment scheme, see coverage BMKB for info.

During the coronavirus crisis the Dutch government helped SMEs with a state guarantee for Dutch SMEs that are fundamentally healthy (i.e. profitable over 2019, 2020 or 2021) and had or expected a liquidity need as a result of the corona crisis. We have granted loans with a BMKB-C guarantee up until June 30th 2022. This Dutch government guarantee covers 90% of up to 75% of your outstanding amount at any time*.

*Effectively approximately up to 65% due to annuity repayment scheme, see coverage BMKB for info.

The borrower pays between 2.0% and 5.85% of the loan amount for a BMKB guarantee. There are no costs for the state guarantee to lenders.

A state guarantee does not secure the continuity of a business. As with any loan, the company can default. When there is no possibility of recovery, it is at the discretion of October to call the guarantee. It is very important to understand that the guarantee does not make a loan risk free. In case the loan defaults, you can lose the part of your outstanding capital that is not covered by the guarantee. The process towards the pay out of the guarantee can be a lengthy process.

It is not ensured that the guarantee will be enforceable in case the loan defaults. The government checks whether the conditions of the guarantee were met after October calls the guarantee. In case the conditions of the guarantee were not met at the time the loan was granted, you may lose up to 100% of your outstanding capital.