The European Commission has authorised under EC Treaty rules on state aid a Greek scheme aimed at companies encountering financing difficulties as a result of the credit squeeze in the current economic crisis.

The scheme, aimed at helping companies in financial difficulties, allows authorities to grant aid in the form of subsidised guarantees for investment and working capital loans concluded by December 31 2010.

The EC said that the scheme meets the conditions of the EC’sTemporary Framework for state aid measures to support access to finance in the current financial and economic crisis, as amended on February 25 2009, because it is limited in time, respects the relevant thresholds and applies only to companies that were not in difficulty on July 1 2008.

"It is therefore compatible with Article 87(3)(b) of the EC Treaty, which permits aid to remedy a serious disturbance in the economy of a member state," the EC said.

Competition Commissioner Neelie Kroes said "The Greek measure facilitates access to loans for companies; this is an effective way of encouraging business investment and economic recovery without unduly distorting competition."

The Greek authorities designed the scheme on the basis of the rules laid down in the Commission's Temporary Framework on state aid to the real economy during the crisis and in particular the conditions for aid in the form of subsidised guarantees.

The reduction of the guarantee fee can be applied during a period of up to two years for loan guarantees contracted no later than December 31 2010.

Where the duration of the underlying loan exceeds two years, the safe-harbour premiums set out in the Annex to the Temporary Framework, as amended, may be applied for an additional period of maximum three years.

The maximum duration of guarantees granted under the scheme is limited to five years. The scheme can be applied to companies of all sizes.