BRUSSELS, Belgium (AP) -- EU regulators said Wednesday they would loosen rules on state subsidies to allow governments to pump more money into cash-strapped companies unable to get bank funding during the credit crisis.
The European Commission said governments for the next two years can help companies during current difficulties by giving most payments of up to euro500,000 ($684,500) without checking with regulators.
This is more than double the current threshold of euro200,000. Larger payments often trigger an EU investigation that can take months to ensure the payment is justified.
States could also guarantee loans at a reduced premium, the EU executive said. This is a major concession as regulators usually insist that state loans and guarantees follow market rates.
Many EU nations led by France have claimed that the EU has been too strict on how far governments can go to help out their economies and their banking sectors as a financial crisis chokes lending.
EU Competition Commissioner Neelie Kroes said: "We must fight the crisis, not each other."
The European Commission said it expects financial markets and business lending to return to normal in the foreseeable future and the looser rules will finish at the end of 2010.
UEAPME, a group of 12 million European small businesses, was critical about allowing more state subsidies, saying the new rules allow governments a license to burn taxpayers' money without checking how that will help the economy.
It said the European Commission has temporarily relinquished its oversight on state aid "leaving the door wide open for a dangerous spending frenzy that will be very hard to resist."