COVID II programme – Government financial support for self-employed and small and medium-sized enterprises

Aid for self-employed persons ('self-employed') and small and medium-sized enterprises ('SMEs') affected by anti-coronavirus measures pursuant to the Czech Government’s 'COVID GUARANTEE' programme was exhausted in one day. On Monday, March 30, 2020, the terms and conditions of the follow-up COVID II program will be published, in which CZK 5 billion should be available. The rush of applications is expected, so action needs to be taken quickly and not delayed. On 19 March 2020, the Government adopted Resolution No 260, which took note of the proposal COVID II for support to self-employed and SMEs affected by measures against the spread of coronavirus COVID II. The Minister of Industry and Trade was entrusted with the implementation of the program. Compared to the previous program, the COVID II support project is directed at small and medium-sized enterprises (up to 250 employees and a turnover of EUR 50 million). The terms of the programme have not been published yet. However, in anticipation of the launch of the program, it is possible to monitor the website of the Czech-Moravian Guarantee and Development Bank, (“CMZRB”) www.cmzrb.cz, under which the COVID program conditions are expected to be published under the “Entrepreneurs” tab under “Guarantees” or “Loans”.

The aim of COVID II is to facilitate access to operational funding for self-employed persons and SMEs whose economic activities are limited due to the occurrence of coronavirus infection and related preventive measures. The aid beneficiary will be able to apply for an operating loan for specific operating expenses specified in the application form at one of the cooperating commercial banks for which it will be able to use the ČMZRB guarantee. The exact parameters of the loan will be announced in the call for proposals (projects), which will be realized by the CIVID II program. It is assumed that ČMZRB could guarantee interest-free loans from as low as CZK 10,000 up to CZK 15 million, with an annual deferral of installments and a guarantee period of up to 3 years. The guarantee could cover up to 80% of a commercial loan.

The special advantage loan can be used to cover operating expenses such as wages, rent, energy costs, acquisition and financing of inventories, supplier-customer invoices, etc. It will not be possible to obtain a loan to cover costs not supported by the program. In this sense, the program should not be usable, like the previous one, for the repayment of a previously granted loan or lease or receivable from partners. What should the applicant prepare for?

As a first step it will be necessary to fill in the official application form, which will be available, including all attachments, on the ČMZRB website. The application will be accepted by all ČMZRB points of sale, but exclusively through the E-Registry, according to the user manual published on the website. At the same time, it will be necessary to apply for an operating loan from commercial banks, saying that the entrepreneur would like to use CMZRB support within the COVID II programme. Many banks have already announced their involvement in the program. Applicants must prepare for their creditworthiness as in the case of other loans. Simultaneously with the bank's credit process, the ČMZRB guarantee can be processed. Although both commercial banks and ČMZRB have declared that they will try to be as quick as possible in the approval process, the length of the process will naturally depend on the completeness and quality of the documents supplied by the entrepreneur.

If the application has the same parameters as in the previous COVID I program, then it is necessary to take into account the preparation of the project, characteristics of the applicant, declaration for identification of natural or legal person, declaration of the applicant for de minimis support, (accounting, tax records), information on loans and other liabilities, the consent of spouse and other documents as required by the program and business policy of individual banks. Compared to the previous program, COVID II is aimed rather at smaller businesses and sole traders. Given the high demand for applications and program exhaustion within a few days, the Ministry of Industry and Trade is already preparing to continue to provide guarantees for interest-free loans for entrepreneurs under the COVID III program, in which an additional CZK 10 billion should be available.