According to a source familiar with the matter at hand, European Union companies that have been impacted by the coronavirus will be eligible for a government loan of up to 5% of their 2019 turnover.

With several countries asking for such a measure the European Commission has agreed to it, said several sources with direct knowledge of the matter at hand.

The size of the loan could also be up to 40% of the beneficiary’s annual wage bill, said the source.

Such loans will be considered as subordinated debt, and will be ranked below senior debt holders in the event of a liquidation. Given the high risks involved, they will be subject to strict conditions.

The cap on turnover or the annual wage bill could undergo change, said the source since the European Commission is seeking feedback from EU countries on the proposal.

In recent weeks, the EU executive has relaxed its state aid rules and has approved trillions of euros via guaranteed loans, grants, subsidized interest rates and short-term export credit insurance offered to virus-hit companies across the bloc.

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