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The aim of the GO scheme is to stimulate lending to SMEs and (medium to) large businesses, which would not, partially, or only with difficulty materialise without a guarantee, by increasing the financing capacity of banks and insurers. Dialogic, together with SEO, evaluated this scheme for the period 2019-2023. In 2020, we also conducted an evaluation of the GO scheme.
Background
The GO scheme was established in 2009 in response to the credit crisis, to ensure the availability of corporate loans for (medium to) large enterprises. Initially, the scheme targeted banks. Later on, it became possible for insurers to also make use of the GO. The Rutte II government made the GO permanent in 2012, as it was expected that - partly due to stricter banking conditions - the issue of availability of corporate loans would persist. Since then, the GO scheme has provided (medium to) large enterprises with substantial activities in the Netherlands and entrepreneurs in Bonaire, Sint Eustatius, or Saba the opportunity to obtain financing that would otherwise not have been possible.
Scope of this evaluation
The regular evaluation of the scheme was originally planned for 2025, but has been brought forward as the scheme expires in July 2025: the GO has a formal term until 1st July 2025. The evaluation outcome will be taken into account when deciding on the possible extension of the scheme. This evaluation covers the period 2019-2023.
In addition to the regular GO instrument, the evaluation includes two variants of the GO, namely the GO-C(orona) and the GO Energy Transition Financing Facility (ETFF). The GO-C and GO-ETFF schemes have already ended, but no evaluation has been conducted so far. Therefore, these schemes will be incorporated into the evaluation of the GO.
Findings
The effectiveness of the GO during the period 2019-2023 was low. The GO was rarely used during the last period (2019-2023), resulting in a low level of goal achievement in the evaluation period. Hence, the effectiveness (the extent to which the goal is achieved) was also limited. The effectiveness of the GO-C was moderate. Goals were only partially met given the low number of applications (68 actual versus 1000 expected). The funds allocated through the GO-C are a fraction of other instruments, such as TVL and NOW. Companies had many alternatives that were quicker and offered more attractive conditions. Additionally, the issue often did not lie in financing, but in a drop in demand leading to a temporary loss of income for companies. The effectiveness of the GO-ETFF was low. The scheme was only utilised twice, and both companies went bankrupt.
High implementation costs and administrative burdens for the GO and GO-C outweigh the size and usage of the schemes (the costs for the GO-ETFF are difficult to determine due to limited use).
The efficiency of the GO and GO-C was high. The cumulative revenues from the GO scheme exceed the cumulative costs (including implementation costs). There is a positive balance of almost €50 million. For the GO-C, the cumulative revenues are currently (much) higher than the costs, although it is challenging to separate these from the GO scheme. The efficiency of the GO-ETFF is low. We do not have quantitative data, but given the bankruptcy of both companies that received funding, substantial costs are likely to have been incurred.
GO or no-GO?
Currently, there appears to be little demand for the GO, and the scheme is not effective given the current market conditions and the goals of the GO. On the other hand, this instrument yields net revenues.
If there is currently no need or necessity for a GO scheme, should the scheme be continued, and if so, in what form? We see three policy options and a fourth option that combines two policy options:
1. Maintain the scheme as it is (do nothing), but simplify it administratively.
2. Preserve the scheme and broaden access.
3. The third option is to specifically focus the scheme on crisis situations and explicitly make it a crisis instrument. In fact, this is the status quo, where the instrument exists but is barely used under current market conditions.
4. A combination of (one of) the above three options, with a combination of the second and third options appearing to be the most plausible.
These policy options only concern the GO. As the GO-C and GO-ETFF no longer exist.
