Minister proposes support loans for businesses in Grindavík, Iceland

The Minister of Finance and Economic Affairs has introduced a bill proposing support loans for businesses in Grindavík, aimed at aiding their operations or facilitating relocation elsewhere. Under the proposed legislation, individuals and companies can apply for loans of up to 49 million Icelandic krónur. The government guarantees 90% of these loans, which must be applied for through banks, with interest rates aligned with the Central Bank’s key rates.

Currently, 73 businesses in Grindavík meet the criteria to qualify for these loans, with the average loan expected to be approximately 20 million krónur. These provisions apply to those who operated a business with a fixed establishment in Grindavík prior to the town’s evacuation on November 10 of last year. The loans are intended to cover operational costs in Grindavík or to rebuild businesses in new locations. Notably, the funds cannot be used to pay off other loans or for refinancing purposes.

Eligibility for the loans requires that business income has dropped by at least 40% compared to pre-disaster earnings. Additionally, it is mandated that the total revenue for 2022, the last full year before evacuation, be at least 15 million krónur, and no more than 1.5 billion krónur.

Certain restrictions apply; for instance, businesses must not have paid dividends, bought back shares, or provided loans to owners or related parties after the evacuation unless deemed necessary to maintain operations. The maximum loan amount is set to comply with EEA regulations regarding state aid.