Russia`s State Duma has passed legislation granting small and medium-sized enterprises (SMEs) and self-employed citizens the right to request a credit holiday once every five years. The law was approved in its second and third readings.
This new document enables SMEs and self-employed individuals (specifically those participating in the `Professional Income Tax` special regime program) to apply for a credit holiday of up to six months from their lenders. Eligible creditors include banks, microfinance organizations (MFOs), and the state corporation VEB.RF. This benefit can be utilized once every five years.
Notably, access to these credit holidays is not contingent on a borrower`s deteriorating financial condition or the need to support specific economic sectors. However, interest will continue to accrue on the outstanding loan balance during the holiday period, as stipulated in the original credit agreement.
The law does, however, include several exceptions. Credit holidays will not apply to loans involving multiple lenders or borrowers (such as syndicated loans) or to loans provided by certain types of microfinance organizations (MFOs) to SME entities, non-commercial, or state-owned MFOs.
Furthermore, the special period will not be available if the collateral securing the loan is already subject to a prior or subsequent pledge.
The law`s provisions will also not extend to loans granted to SMEs that are generally ineligible for state support. This category includes credit and insurance companies, private pension and investment funds, professional securities market participants, pawnshops, parties to production sharing agreements, gambling businesses, and foreign residents, unless international treaties state otherwise.
The Russian government is expected to set the maximum loan amounts eligible for these credit holidays. Until then, interim limits are established: 60 million rubles for micro-enterprises, 400 million rubles for small enterprises, 1 billion rubles for medium-sized enterprises, and 10 million rubles for self-employed individuals.
The explanatory note accompanying the law indicates that these amendments are designed to reduce the risk of defaults among SME borrowers and self-employed individuals, thereby enhancing the financial stability of lenders.
The legislation is set to become effective on October 1, 2025, and will retroactively apply to loan agreements signed as early as March 1, 2024.
Companion Legislation
In related legislative action, the State Duma also passed an accompanying law, likewise effective October 1, 2025, which amends existing legislation. Alexey Govyrin, a member of the State Duma Committee on SMEs, explained that these amendments formalize the right to suspend debt obligations and directly prohibit foreclosure on mortgaged or collateralized property during the credit holiday period.
Additionally, the mortgage law now explicitly prevents early foreclosure during credit holidays, and the microfinance law mandates that these holidays be taken into account during loan restructuring. For mortgage-backed securities, the law clarifies that granting a credit holiday does not constitute a default event for trading or redemption purposes, which, according to Govyrin, helps maintain their liquidity during widespread use of the deferral mechanism. He further highlighted that these changes will apply retroactively to agreements made from March 1, 2024, thus covering loans issued during periods of peak interest rate hikes.
