The European Commission has approved a Finnish guarantee scheme aimed at providing relief to companies encountering financing difficulties as a result of the credit squeeze in the current economic crisis.

The scheme allows Finnish authorities to grant aid in the form of subsidized guarantees for investment and working capital loans concluded by the end of 2010.

The reduction of the guarantee fee can be applied during a period of up to two years, but the scheme does not apply to firms that were already in difficulties before July 1, 2008, i.e. before the credit crunch.

The commission, guardian of the European Union (EU) competition policy, said Friday that the scheme was in line with its rules on state aid measures to support access to finance in the current financial and economic crisis.

"The Finnish scheme helps companies to obtain access to finance despite the current credit squeeze. This can be an effective way of encouraging business investment and economic recovery without unduly distorting competition," EU Competition Commissioner Neelie Kroes said in a statement.

(Xinhua News Agency June 14, 2009)