BRUSSELS, Feb 19 (Reuters) - The European Commission on Thursday authorised a temporary German plan to grant aid in the form of reduced interest rates on loans to businesses hit by the credit squeeze.
The Commission, executive arm of the 27-nation European Union, said in a statement that the low rates would be available for loans contracted no later than December 2010, but only on interest payments up to Dec. 31, 2012.
After that date, companies would have to pay market rates, and the scheme does not apply to firms that were already in difficulty before the credit crunch, the Commission added.
“The measure offers a significant reduction in the cost of loans, which is an effective way of encouraging business investment and economic recovery, without unduly distorting competition,” EU Competition Commissioner Neelie Kroes said.
The scheme is the fourth German aid measure authorised by the EU executive. Other such plans include a 15 billion euro ($18.9 billion) loan programme and a scheme allowing up to 500,000 euros to individual businesses in need. (Reporting by Bate Felix, editing by Dale Hudson)