Széchenyi Card, the SME Credit Card Program
Dear Visitor,
KA-VOSZ Financial Services Trading Close Co., is a joint corporation of the National Organization of Entrepreneurs and Employers (NAEE, in hungarian: VOSZ) and the Hungarian Chamber of Commerce and Industry (HCCI, in hungarian: MKIK). In 2002 VOSZ and MKIK decided to work out a system providing their members and those of their partner organisations with credit-card based, low-interest loans for micro-, small- and medium enterprises at Hungarian credit institutions. The system was named Széchenyi Card by the initiators. In order to consolidate small enterprises, the Government pioneered the initiative and provided state guarantee through Creditguarantee Co.(Garantiqa), thus participating in the successful realisation. On 4 March 2002 VOSZ and MKIK founded KA-VOSZ Close Co. to perform pragmatic tasks.
The main tasks of KA-VOSZ Close Co. include professional management and coordination of Széchenyi Card Program, intermediation between clients and participating banks, handling and forwarding client data and pre-qualification.
Széchenyi Card Program
Széchenyi Card is a credit facility on state supported preferential terms. Its aim is to provide micro-, small- and medium enterprises with a minimum business history of one year with unrestricted-use credit managing linquidity risks.
The credit is freely usable to any expenditures – meeting the taxing and accounting standards – in the interest of the enterprise, including purchases, cash withdrawal, wire transfer, collection or else.
The credit cannot be used – according to EU de minimis regulations – for activities dealing with goods to be exported, constructing a distribution network and financing any costs of export activities.
Széchenyi Card is applicable for enterprises that possess either an annual fiscal report for a whole year (365 days) or a private entrepreneur’s annual tax report for one whole year (365 days).
Available credit institutions
The applicant has the right to choose the bank to contract with, among those participating in the Program. There are five commercial banks involved int he program now, representing 75% of the hungarian bank sector.
Credit limit
The revolving credit limit for the Széchenyi Card can be either 500,000 HUF (€ 2,000) or any round million amount between 1 million and 25 million HUF (€ 100,000), based on the applicant’s choice, the pre-qualification of KA-VOSZ, and the Bank’s client qualification.
The credit functions as a revolving credit; in case of credit entry on the account, at the end of the day the credit item is automatically amortized from the balance of current account after all transactions (credits and debits). The Bank only charges interest on the current debts. Interest calculation is based on the daily loans outstanding.
Duration of the credit
The credit is available from the day the credit agreement takes effect, paralelly with the acceptance of the cash surety application by Creditguarantee, initiated by the Bank. The credit expires on the 365th day following the date of the credit contract. Expiration of the Széchenyi Card does not correspond with the expiration of the credit.
The Client has the right to claim the extension of the credit duration. In this case the application form and its appendices are to be handed in at the Registration Office not less than 30 days prior expiration. In case of positive loan evaluation the Bank enters into a new contract with the Enterprise. The limit can be modified at the extension procedure or even in the period.
Loan payment
Following a requalification prior expiration, the Bank can prolong the term of expiration, which technically means a new credit agreement. The capital debt, the interest and the accessory costs become due on the day of expiration and are to be paid to the Bank by the Enterprise. The available credit based on the new agreement may be used to settle the capital debt of the expiring agreement on condition that the new agreement is signed within 30 days prior the expiration of the expiring agreement.
In case the Enterprise applies for prolongation (new credit enquiry), but the new credit agreement does not take effect on the day of expiration at the very latest, or the Enterprise does not apply for prolongation, or the credit agreement is not signed based on client qualification, the Enterprise is obliged to pay their complete debts on the day of expiration. Complete debts include capital debt, interest, service charges and all accessory costs debiting the Enterprise.
Currency bank account
In order to record the credit based on the Széchenyi Card and the transactions performed with the Széchenyi Card, the Bank opens an account for the applying Enterprise. For the same reasons, the Bank is entitled to the exertion of the currency bank account opened earlier by the Enterprise kept by the Bank. The Bank is not entitled to issue a bank card other than the Széchenyi Card to the Enterprise for the same account.
Collaterals
Private individual as cash guarantor
In case of private enterpreneurs, the guarantee of an adult Hungarian citizen, or an adult Europen Union citizen with at least 3 years of permanent residence in Hungary is required.
In case of companies, the guarantee of an adult Hungarian citizen, or an adult Europen Union citizen with at least 3 years of permanent residence in Hungary who is the direct or indirect owner(s) of the company with alone or jointly at least 50% share of the company is required.
Creditguarantee Co. as cash guarantor
Creditguarantee Co. guarantees the redemption of an amount equalling 73% of the employed capital and interest from the credit available for the Enterprise.
Disclosure
On condition the Enterprise remains in debt with more than 50,000 HUF (€ 200) for more than 30 days during the quarterly redemption of the employed credit either due to the retention of state interest subsidy, to notice for any other reason or on expiration and fails to fulfil the written call of the Bank, the Bank is entitled to inform KA-VOSZ.
KA-VOSZ is entitled to disclose this fact with the name (company name) city address (seat / branch), profession (scope of business) and the amount of debt. Disclosure is not to be preceded by any other actions of debt collection besides the above-mentioned call by KA-VOSZ. The channel of disclosure is either a local paper according to the seat or branch, a national paper, an official paper of VOSZ, MKIK or the other organisations associated with the Chambers or the Széchenyi Card, the homepage of these organisations and KA-VOSZ, or the notice-board of the local notary or offices. KA-VOSZ. is entitled to disclose the above-mentioned information on all these forums repeatedly. Furthermore, VOSZ or the local chamber of trade and commerce is entitled to expel the Enterprise.
Application
Széchenyi Card can be claimed by handing in the necessary documents to the registration offices of VOSZ, local chambers of trade and commerce and KA-VOSZ.
Széchenyi Card application form is the credit request itself, the data of which is recorded on the spot into the IT network of KA-VOSZ. The recorded data is transferred by KA-VOSZ. electronically to the Bank chosen. The Bank delivers the cash guarantee request electronically to Creditguarantee Co. Apart from the data, since the documents required for the credit review are also to be sent for the bank, the registration office clerk will receive the original documents or authenticate the xeroxed copies. Following the arrival of the complete documentation, the Banks will review the application and deliver the cash guarantee request to Creditguarantee Co. Creditguarantee Co. decides about the cash guarantee within 1 working day.
The credit duration and the credit limit of the current credit agreement can be modified by initiating a new application procedure and signing new credit, card and cash guarantor agreement. The new procedure is to be initiated at the registration office.
State support
The Government provides the following interest subsidy for the Széchenyi Card Program:
• support up to 50% of the guarantee fee by Creditguarantee, as well as
• 2 percent up to 10 million HUF for cards issued between 1 January 2006 and 31 December 2006, and
• 1 percent up 10 million HUF for cards issued between 1 January 2007 and 31 December 2010.
The source for the interest subsidy and the guarantee fee support is the budget expenditure target of the Small- and Medium Enterprises Target of the Ministry of Economy (NGM).
Fees and costs
Fees to be paid on application
All Enterprises can apply for the Széchenyi Card Program that are not member of a lobby. These Enterprises can hand in their application by paying the registration fee. In case the Enterprise is or at the time of application has become a member of a local chamber of trade and commerce or the National Organisation of Entrepreneurs and Emloyers, they are not to pay a registration fee. Members of other lobbies (Partner Organisations) associated with the Széchenyi Card Programme are to pay a reduced registration fee.
The registration offices do not, by any title whatsoever, charge any fees or costs other than the registration fee associated with the credit application.
Costs arising on opening the account and on issuing the credit
The Enterprise is to pay an annual card fee for the issuing bank, the amount of which is determined based on the credit made available for the Enterprise. The amount of the card fee will be charged from the account of the Enterprise by the Bank. (The Bank is entitled to charge any other fees associated with card use arising during the credit term.)
Creditguarantee charges a cash guarantor’s fee (guarantee fee) of 1.7% based on the 80% of the credit defined in the credit agreement. The Enterprise is to pay only half of the guarantee fee, because the other half is paid by the state as means of support. The part of the guarantee fee to be paid by the Enterprise will be charged from the account of the Enterprise by the Bank.
On issuing the credit, the bank does not charge any fees or costs other than the guarantee fee and the card fee.
Costs and fees arising during the credit term
The Banks do not charge any fees or costs associated with the disbursement, disposability and redemption of the credit other than the credit fee and the default interest, if any.
Credit fee (interest + handling fee)
The Banks charge a credit fee variable by interest periods. The amount of the credit fee does not vary within one interest period. The first interest period starts on the day the agreement takes effect or the day after the former period ends and finishes at the end of the calendar quarter, defined by the Bank as the usual quarterly closure.
The credit fee consists of the base interest, the extra interest and the handling fee to be calculated interest-wise. In the first interest period, the base interest rate is calculated in accordance with the 3-month BUBOR (Budapest Interbank Offered Rate) on the day defined in the credit agreement. The Banks are entitled to modify the base interest rate at the beginning of each interest period in accordance with the 3-month BUBOR on the day the new interest period starts.
The rate of the extra interest is 4% per annum.
The rate of the handling fee is 0,8% per annum.
The credit fee (credit interest + handling fee) altogether is the 3-month BUBOR + 4% + 0,8%, of which the Enterprise is to pay the part above state support.
The credit fee is to be paid quarterly, at the end of each calendar quarter. The Bank will charge the account of the Enterprise with the amount of the credit fee on due date. In case the Ministry of fails to transfer the amount of support to the Bank because it has been suspended or detained with reference to the public due of the Enterprise, the Enterprise is to pay the amount of support as well.
Charge account fee
The fees associated with the management or online applications of the account, as well as those associated with debits, credit entries or any other operations are calculated similarly to the fees of other corporate accounts and disclosed by the Bank in the form of announcements.
Fees arising on term extension and credit modification
The credit term can be extended and the credit can be modified by completing a new application procedure and signing new credit, card and cash guarantor’s agreements. New applications are available at the Registration Office.
In the case of new agreements, the applicant is to pay the fees mentioned above.
Why Széchenyi?
Széchenyi Card was named after István Széchenyi (Vienna, 21 September 1791 – Döbling, 7 April 1860).
Being the most significant landlord in the country, Széchenyi was the initiator of the patrician liberal movements in the first half of the 19th century. He devoted his whole life to the notions of progress; he fought for the Hungarian citizenry and the economic development. He acted as Minister of Employment and Transport in the First Hungarian Government in 1848. As a statesman and political writer, his works Hitel (Credit – 1830), Világ (Light – 1831) and Stádium (Status – 1833) are among the most remarkable pieces of Hungarian political literature. His programme discovered the lack of capital needed to develop the technologies required by the noblemen interested in increasing production. Besides, he claimed the improvement of the credit situation in Hungary.
To hasten Hungary’s economic development, he established factories, organised the building of Chain Bridge and the regulation of the Danube, and founded the Hungarian Academy of Sciences.
From 1830, he managed several enterprises, such as the Danube Steamboat Corporation in 1831, the Mill in Pest in 1837 and participated in the opening of the Hungarian Commercial Bank in 1841.
NEW!
Accordint to the decision of the hungarian government the Széchenyi Card Program has been extended with further state supported loans. The government aims the small- and medium enterprises with 2% per annum interest subsidy in the extended program concerned to the entire credit line.
Széchenyi Current assets loan is a credit facility on state supported preferential terms to aim micro-, small- and medium enterprises access to finance with a maximum three years duration credit line managing assets such as stocks, raw materials, supplies.
The credit can be called down as the expenses arised. Any invoice can be covered by the load that is suiteable to the EU de minimis regulations.
The Széchenyi Current assets loan can be requested from 2nd of august 2010 in all registration offices.
Széchenyi Project loan is a credit line upt ot 50 million HUF (€200,000) to support SMEs’ innovations, such as infrastructural investment, capacity enlargements, new premises, etc. The credit line has a maximum 10 years of duration with a 2 years grace period.
The SMEs’ can be apply for the Széchenyi Project loan from 1st of september 2010.
Széchenyi Tender financing is a credit line is to aim SMEs’ successfuly participate on EU tenders with a credit line up to 50 million HUF (€200,000) for 10 years of duration. The conditions will be publicated by the end of the year.
All the other conditions and application regulation are the same as in the original Széchenyi Card.
Széchenyi Card Club
Beside providing the popular credit program, the aim of Széchenyi Card Club is to provide an opportunity for small and medium enterprises to develop their everyday operations and to be able to make decisions based on up-to-date, useful information.
With a membership that accompanies the Széchenyi Card Program, the Club informs the inquirers about the offers of certain great companies representing each industry.
Among the latest facilities of the Club is the opportunity for the SMEs’ to appear on the website with their offers, thus widening their clientele.