Széchenyi Card, the SME Credit Card Program
The Széchenyi Card Construction is serving to boost the liquidity of Hungarian micro, small and medium size enterprises, and came into being on the basis of the cooperation of the National Association of Entrepreneurs, the Hungarian Chamber of Commerce and Industry, Hitelgarancia Rt., the Ministry of Economy and Transport and MKB Rt. The companies may apply for the card in the offices of the Chamber of Commerce and Industry of Pécs-Baranya.
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.(Hitelgarancia ZRt), 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, intermediation between clients and participating banks, handling and forwarding client data and pre-qualification.
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 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 programme. There are five commercial banks involved int he program now, representing 75% of the hungarian bank sector.
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 the chamber, 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 Co., 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.
In case the credit item exceeds 80% of the credit limit provided to the Enterprise on the closing day following the quarterly debit of interest, redemption commitment arises for the Enterprise to be met within 15 days after the quarterly closing.
The complete credit amount is available again following the day of redemption.
In case the credit item does not exceed 80% of the credit limit provided to the Enterprise on the closing day following the quarterly debit of interest, the Enterprise will not have redemption commitments.
Should the Enterprise fail to meet the commitments set forth by the Bank within 15 days following the quarterly closing, the Bank will, on the 16th day following the quarterly closing, block the credit and deliver a notice to the Client informing them about the immediate loan withdrawal and the whole credit item to become due on the day of the withdrawal, unless the redemption is met within 30 days following the quarterly closing.
Redemption on expiration
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.