Support for businesses hit by the coronavirus outbreak
The steps taken in response to the spread of the new coronavirus will have broad economic effects on business entities. We have prepared an overview of potential support and other key measures being negotiated by the government with business representatives.
In cooperation with the Czech-Moravian Guarantee and Development Bank (ČMZRB), the Czech Ministry of Industry and Trade (MIT) has prepared an interest-free financing scheme, the COVID Loan, for sole traders and small and medium-sized businesses hit by the coronavirus. The loan is intended for firms whose business activities were restricted as a result of the coronavirus epidemic. Specifically, it should cover situations where applicants experience delays, suspensions or cancellations of performance obligations arising from business contracts.
The loan is free of interest and other fees and may be drawn in amounts ranging between CZK 0.5 million and CZK 15 million. It may be used to cover up to 90% of eligible costs, including the following categories of eligible costs:
- acquisition of low-value tangible and intangible assets (where these are recognised as expenses/expenditures – as opposed to fixed assets – by the support recipient);
- acquisition and financing of inventories;
- other operating expenses/expenditures (including receivables pre-financing) that can be supported by accounting documents (e.g. employee wages, energy costs, rental expenses, etc.).
The term of the interest-free loan has been set for a period of up to two years from concluding the agreement, with an option to postpone repayment for up to one year. In accordance with the set criteria, applicants must file an application for support together with all required appendices (the most important being a document proving that the business entity got into difficulties in connection with the coronavirus). The receipt of applications was launched on Monday 16 March 2020, 14 days earlier than originally planned. For details and conditions of the scheme, please visit ČMZRB’s website.
In addition, businesses may take advantage of ČMZRB’s continued offer of previously published and approved tools. These include guarantees for commercial loans for small and medium-sized businesses (the M-Záruka and EXPANZE programmes), and special loans under the EXPANZE loans programme. For details, visit ČMZRB’s website.
On 19 March the government decided to increase the funds available for the COVID Loan programme to CZK 5 billion. This amount will be provided through ČMZRB. An additional CZK 5 billion will be earmarked for guarantees for commercial banks that will provide loans under similar conditions.
In addition to the above, the MIT is looking into the possibility of reallocating funds from EU operational programmes as currently required. The MIT has also extended by 30 days the deadline for applications under the currently open invitations of the Enterprise and Innovations for Competitiveness Operational Programme. This change applies to all invitations for which the receipt of applications was originally supposed to end no later than 30 April 2020 (and was not ended by 17 March 2020).
In connection with the COVID19 outbreak, the Czech Chamber of Commerce is negotiating with representatives of employers, unions and the government regarding the parameters of a new programme to reimburse wage compensations paid by employers to employees in the event of impediments to work. The programme is being proposed by the Ministry of Labour and Social Affairs. We have already informed you about the initial outcome of the negotiations.
We are continuously monitoring the situation. If you have any questions, please feel free to contact us.