B2B Lending Institution / Loans / Interest in Poland
Loan regulation in Poland
Loan agreements in Poland are subject to a basic regulation included in art. 720-724 of Civil Code, which concerns both loans granted to companies (B2B) and consumers (B2C).
Key rules regarding loan contacts in Poland
Pursuant to the most important rules established in art. 720-724 of Civil Code:
- under the loan agreement the lender is obliged to transfer to the borrower a certain amount of money and the borrower undertakes to return the same amount of money; instead of money, the subject of the loan may be items marked only in terms of species, i.e. items that can be determined by measure, weight, quantity (e.g. agricultural produce, raw materials, finished products, construction materials),
- the loan agreement with value exceeding PLN 1,000 requires a documentary form (e.g. e-mail, fax, SMS or MMS, video, audio or audio-video),
- the lender may withdraw from the contract and refuse to hand over the subject of the loan if the loan repayment is in doubt due to the poor financial condition of the borrower; however, this right is not vested in the lender if, at the time of concluding the agreement, lender knew or could have easily found out about the poor financial condition of the borrower,
- the claim of the borrower for the issue of the subject of the loan shall expire after six months from the moment the subject was to be released; on the other hand, the lender’s claim for loan repayment is subject to the general limitation rules, i.e. in the case of B2B loans, such a claim will be subject to a 3-year limitation period from the date of maturity of the claim (loan return date),
- if the date of return of the loan is not specified in the agreement, the borrower is obliged to return the loan within six weeks after the termination of the loan by the lender.
Polish statutory implied loan terms
The loan agreement may consist of other, additional provisions that those specified above in art. 720-724 of Civil Code of Poland or could modify some of the rules established in the above-mentioned provisions to the limited extend. In particular:
- the loan does not have to be paid to the borrower upon conclusion of the contract, but it may take place at another date specified in the contract,
the loan may be disbursed in a single payment or in the form of installments (tranches) within the time limits specified in the contract or at the borrower’s request,
- the payment of the installments may also depend on the fulfillment of the conditions specified by the parties,
- in the light of the regulations, the method of using the subject of the loan is irrelevant, because the borrower obtains ownership of the subject of the loan and has, in principle, full freedom in the manner of its use; however, the parties to the loan agreement may stipulate the obligation to use the subject of the loan in a specific way, e.g. under pain of withdrawal from the loan agreement by the lender or early termination of the agreement,
- the provisions of Civil Code do not determine whether the loan is granted in exchange for remuneration or free of charge and leaves the parties full freedom in this regard, however, it shall be remembered that concluding free loan agreements may raise doubts of tax authorities, especially in the case of B2B lending, such agreements are not economically justified, as a result of which tax authorities may initiate proceedings to determine the benefits received by borrowers from a free loan and determine the amount of due income tax,
- the provisions of Civil Code also leave the parties the freedom to determine the form of lender’s remuneration in the loan agreement; in practice, not only interest, but also various fees, commissions or margins are reserved in loan agreements as components of remuneration due to the lender (non-interest loan costs); the remuneration in the loan agreement may also consist, for example, in the obligation to transfer the ownership of rights or items, a permit to use specified items or a share in the profit earned by the borrower in connection with the use of the loan object,
- the subject of the loan may be not only specified in PLN, but also in a foreign currency, however, pursuant to art. 358 § 1 of Polish Civil Code, if the subject of the obligation to be performed on the territory of the Republic of Poland is a sum of money expressed in a foreign currency, the borrower may perform the repayment in PLN, unless the agreement expressly stipulates that the performance shall be provided only in a specific foreign currency,
- rights and claims resulting from the loan agreement may be transferred onto another entity on general terms, which means that pursuant to art. 509 § 1-2 of Civil Code, the lender may do this without the borrower’s consent, unless such right has been expressly excluded in the agreement; along with the debt, all rights related to it, in particular the claim for overdue interest, pass to the transferee; while the transfer of the borrower’s rights and obligations to a third party cannot take place without the consent of the lender under art. 519 § 1-2 of Polish Civil Code.
The provisions described above state most common, typical regulations, which are usually included in the loan agreements. However, they are not a complete, exhaustive directory, which has an open-ended nature. Under art. 353(1) of Polish Civil Code the parties may arrange the legal relationship at their discretion, as long as its content or purpose does not contradict the properties (nature) of the loan agreement, the law or the principles of social coexistence (good mercantile practice).
Corporate requirements for borrowers / loan or facility providers
If the borrower is a Polish limited liability company (spółka z ograniczoną odpowiedzialnością, sp. z o.o.) the art. 230 of Commercial Companies Code, which regulates the corporate requirements regarding incurring liabilities, is applicable.
Pursuant to art. 230 of Polish Commercial Companies Code, the conclusion of a loan agreement with a value twice the amount of the share capital requires a resolution of the shareholders, unless the articles of association provide otherwise. Under art. 17 § 2 of Polish Commercial Companies Code, the resolution may be adopted before conclusion of the agreement or after, but not later than within two months from the date of the conclusion. The confirmation expressed after the declaration has been submitted has retroactive effect from the moment the legal act is performed.
However, if the loan agreement is signed by the borrower’s representatives without the consent expressed in the shareholders’ resolution, the agreement is still valid and effective. It does not exclude liability of management board members towards the company (the borrower), which is internal in nature and does not affect the legal relationship with the lender.
Although the above-mentioned issue has no direct impact on the validity of loan agreement, it is worth noting, because it concerns potential conflicts in the corporate structure of the borrowing company.
Draft regulations provided to counteract usury. Non-interest loan cost limitations
On December 28, 2021 the Polish government published the draft of act amending certain acts to counteract usury, which was notified to the European Commission under number 2021/900/PL (hereinafter referred to as the: “Anti-usury Bill”).
As of the date of this article, the Anti-usuary Bill is currently undergoing the standard legislative path. On January 12, 2022, the first reading of the bill took place in Sejm (lower chamber of Polish parliament), and on January 26, 2022, it was sent to the Public Finance Committee and the Justice and Human Rights Committee of Sejm. In reference to the above, the Anti-usuary Bill may be subject to amendments in the future.
First of all, the Anti-usuary Bill introduces several new provisions to Polish Civil Code regarding the loan agreement. Please, find below the description of the most important, drafted provisions related only to B2B lending activity:
- the loan agreement may provide for the lender to be entitled to demand from the borrower interest and non-interest costs, which include:
- margins, commissions or fees related to the preparation of a loan agreement, granting a loan or its servicing, or costs of a similar nature,
- fees related to the postponement of the loan repayment date, its untimely repayment or costs of a similar nature,
- costs of additional services, in particular insurance costs, costs related to establishing a security for a loan, costs of obtaining information about the borrower, if their incurring is necessary to conclude a contract
– with the exception of notary fees and public-law levies, which the parties are obliged to pay in connection with the conclusion of the loan agreement,
if the lender is represented at the conclusion or performance of the loan agreement by an agent or other person, the non-interest costs also include the remuneration of the agent or that person, provided that they are borne by the borrower.
The drafted provisions of art. 720(2) § 1-4 of Civil Code of Poland regulate the maximum amount of non-interest costs, which state i.a. that over the entire loan repayment period non-interest costs may not exceed 25% of the total loan amount, however these provisions are applicable only to the loan agreements concluded with individual persons for purposes unrelated to their business or professional activity, analogically as further provisions of art. 7203-7205 and art. 7241 of Civil Code. So, as these regulations do not concern B2B lending activity, they will not be analyzed herein.
Restrictions regarding loan interest rate
Under Polish law there are two main categories of interest:
- capital interest – which constitutes a kind of remuneration for granting a loan,
- late payment interest – which constitutes a kind of compensation for delay in performance of the monetary obligation.
Capital interest in Poland
Therefore, capital interest is characteristic for loan agreements.
Pursuant to art. 359 § 1 of Civil Code the capital interest is due only if it results from the loan agreement. It means that:
- there is no legal obligation to impose on the borrower the duty to pay capital interest, however if the loan agreement is free from any kind of remuneration due to the lender, including especially capital interest, the loan agreement may be a subject to the examination of tax authorities, as it was mentioned before,
- if the lender is interested to grant a loan in exchange for the payment of capital interest, there shall be provided proper provisions in the content of the loan agreement, because statutory provisions of CC do not establish interest by default and the agreement may then be considered free of charge.
There are two kinds of capital interest:
- statutory, capital interest,
- contractual, capital interest.
Interest rates – Poland
Statutory interest rate – 8,75% (06.2022)
In reference to art. 359 § 2 of Polish Civil Code, if the loan agreement provides for the payment of capital interest, but does not specify its amount, the statutory interest is due. The amount of it is equal to the sum of the reference rate of the National Bank of Poland (updated reference rate may be checked here: https://www.nbp.pl/home.aspx?f=/dzienne/stopy.htm) + 3.5 percentage points. The current reference rate of the National Bank of Poland is 5,25 %, so the total amount of statutory, capital interest is 8,75 % (06.2022).
Maximum interest rate – 17,5% (06.2022)
The contractual, capital interest might be freely set by the parties to the loan agreement, however it cannot exceed the maximum interest, i.e. 2 x statutory interest on an annual basis pursuant to art. 359 § 2(1) of Civil Code of Poland. So, currently the maximum amount of the contractual, capital interest is 17,50 % annually (06.2022).
If the amount of interest under the loan agreement exceeds the maximum interest, the maximum interest is due. Contractual provisions may not exclude or limit the above provisions on maximum interest, also in the event of a choice of foreign law. If the parties choose foreign law in the agreement, the above statutory provisions will apply to maximum interest anyway (art. 359 § 22-3 of Civil Code).
Is B2B lending activity in Poland a subject to specific regulatory provisions?
No, there is no specific normative acts on B2B loans under Polish law. B2B lending activity is a subject to general regulation included in the statutory provisions of Civil Code.
Is B2B lending activity in Poland subject to a license or permit?
No, the business activity covering B2B lending is not a subject to any specific licensing, certification or registration requirements, nor itself it is specifically supervised by public authorities.
Are there any specific requirements regarding financial statements of B2B lending company in Poland?
No, there are no special requirements with respect to the preparation of financial statements of the company providing B2B loans. The granted loans and obtained interest shall be disclosed on the general basis.
Are there any specific restrictions regarding the lender in B2B lending activity?
No, there are no specific restrictions regarding the lender in B2B loan agreements.
What is the legal form of the loan agreement in Poland?
Under Polish law the loan agreement with value exceeding PLN 1,000 requires only a documentary form (e.g. e-mail, fax, SMS or MMS, video, audio or audio-video), but it is recommended to conclude it in written form for evidence purposes.
When the lender may withdraw from the loan agreement?
The lender may withdraw from the loan agreement and refuse to disburse the loan, if the loan repayment is in doubt due to the poor financial condition of the borrower. However, this right is not vested in the lender if, at the time of concluding the agreement, lender knew or could have easily found out about the poor financial condition of the borrower. Other cases of withdrawal from the loan agreement may be specified in the content of this agreement.
When the lender may withdraw from the loan agreement?
If the date of return of the loan is not specified in the agreement, the borrower is obliged to return the loan within six weeks after the termination of the loan agreement by the lender.
Are there any non-interest loan cost limitations in Poland?
Currently there are no limitations regarding other than interest costs of B2B loan agreements. The Polish Parliament is working on drafted act, which regulate the maximum amount of non-interest costs, by stating i.a. that over the entire loan repayment period non-interest costs may not exceed 25% of the total loan amount, however these provisions are applicable only to the loan agreements concluded with individual persons for purposes unrelated to their business or professional activity. So, these drafted regulations do not concern B2B lending activity.
What are the interest loan limitations in Poland?
Under Polish law, the amount of contractual, capital interest might be freely set by the parties to the B2B loan agreement, however it cannot exceed the maximum interest, i.e. twice the amount of statutory interest on an annual basis. If the amount of capital interest is not specified in the loan agreement, but the obligation of payment of it is imposed on the borrower, the statutory interest is due.
How the loan agreement can be secured?
The lender’s claims against the borrower resulting from the loan agreement may be secured in different ways, depending on the individual circumstances of the case, including the value of the loan, its purpose and the borrower’s situation. In Poland the most common forms of security are:
- pledge or registered pledge on movable property or property rights,
- transfer of ownership for security,
- promissory note,
- bank guarantee,
- surety of a third party for the borrower,
- voluntary submission to enforcement by the borrower or the surety.