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COVID Plus guarantees and postponement of the deadline for applications for subsidies

The anticipated Government regulation specifying detailed conditions for the provision of guarantees under the COVID Plus programme has been published in the Collection of Laws. Guarantees for loans granted within this programme will be provided by the Export Guarantee and Insurance Corporation (EGAP).

Guarantees should be provided only to enterprises:

  • having more than 250 employees (even if seated in Prague);
  • whose share of exports in the total annual revenues from the sale of products, provision of services and sale of goods reached at least 20% in the last accounting period; a manufacturing or trading company may prove its share of export indirectly through the exporter’s share of export;
  • not benefiting from any other State aid in the form of loan guarantees in connection with the COVID-19 pandemic;
  • which have submitted an affirmation declaring, in particular, that the enterprise has experienced a sudden lack of liquidity, was not insolvent before 12 March and 
  • has no overdue liabilities towards the State.

Excluded from the aid are companies predominantly engaged in land and pipeline transport, water transport, air transport, accommodation, activities of travel services intermediaries, travel agencies and in other booking and related activities, activities of gambling houses, casinos and betting agencies.

The applicants will be bound by a number of conditions and limitations stipulated in the individual loan agreements. These will include the following obligations and limitations, in particular:

  • To pay liabilities towards suppliers properly and in due time;
  • To pay wages to employees properly and in due time;
  • Limitation of payment of dividends or other shares of profits, prohibition of sale of equity interests and sale of any tangible and intangible fixed assets or their encumbrance by third-party rights without the consent of the financing bank during the term of the guarantee.

The maximum amount of the loan for which the guarantee will be provided may not exceed 25% of the borrower’s total annual sales in 2019. The minimum amount of the loan is set at CZK five million. At the same time, the maximum aggregate of all outstanding principal amounts of loans secured by EGAP’s guarantee may not exceed the amount of two billion Czech crowns per beneficiary or group of economically related companies.

Guarantees will be provided for three years for operating loans and for five years for investment loans. They will cover up to 80% of the principal amount of the loan if the borrower is assigned a rating better than B- by the Export Insurance Corporation, and 70% if the borrower achieves exactly the rating of B-.

Four billion crowns have been allocated from the State budget for the first phase of this programme; this amount may be further increased by the Government.

The COVID Plus guarantee programme is expected to be launched in the first week of May as it has to be first notified to the European Commission.

News on subsidies

The Ministry of Industry and Trade has updated the calls timetable for subsidies for the Operational Programme “Enterprise and Innovation for Competitiveness” in that it postponed the deadlines for the following calls:

  • Real Estate – Call IV Travel Industry – extended until 31 May 2020
  • Real Estate ITI Hradec Králové – extended until 31 May 2020
  • Energy Savings – Call V – extended until 30 June 2020
  • Smart Grids 1 – Call V – extended until 30 June 2020
  • OZE – Call V – extended until 30 June 2020
  • Low-carbon Technologies – Call V – extended until 28 June 2020

Simultaneously, all fixed deadlines set out in the individual calls have been postponed by thirty days (the latest date for completion of the project, fixed deadlines for the submission of relevant compulsory annexes, etc.). The reason is that the relevant compulsory annexes are hard to obtain from third parties due to the COVID-19 pandemic. Further changes and measures in the area of subsidies should follow.