COVID plus – experience with utilising EGAP guarantees

The COVID plus guarantee programme provides support for large businesses with at least 20% of their total annual revenue from sales coming from export. The window for filing applications has been opened as the European Commission has approved guarantees worth CZK 142 billion for the programme. This is a summary of some experience from practice.

With COVID plus, the application procedure is quite different from the previous programmes, COVID I and COVID II, aimed at supporting small and medium-sized enterprises, where each business had to directly contact the Czech-Moravian Guarantee and Development Bank directly (CMZRB). In this programme, the businesses are supposed to first pre-negotiate the loan with their own bank, which will then complete the guarantee procedure with the Export Guarantee and Insurance Company (EGAP).

As such, the provision of the guarantee depends on evaluation by EGAP in each case. That means that EGAP’s internal rating of the individual applicants is an important parameter. Companies rated above B- will obtain a guarantee of up to 80% from EGAP. For B-, the maximum guarantee will be 70%. Applications of businesses rated lower than B- will be denied.

The loans and guarantees will be provided for a maximum of 3 years for operating loans and loans financing working capital and maintenance of business activities, and for a maximum of 5 years for investment loans, where the loan margin of the financing bank cannot exceed the following numbers for the duration of the loan:

  • 1.5% p.a. on loans provided for up to 1 year;
  • 2.5% p.a. on loans provided for up to 3 years;
  • 3.5% p.a. on loans provided for up to 5 years.

As the maximum sum that the State has allocated for the COVID plus guarantees is CZK 142 billion, it can be expected that the possibility to acquire support will expire after this amount is utilised. If this does not happen, it will be possible to file applications until the end of 2020. The list of annexes necessary for filing applications is available here. Do not hesitate to contact us for help with preparing an application for COVID plus.

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