Assistance from the Industrial Development Agency – benefits for the entrepreneur
Within the framework of the New Opportunity Policy programme, the Industrial Development Agency (hereinafter: ARP) offered entrepreneurs three forms of support.
Three forms of support for the entrepreneur
ARP offered entrepreneurs three forms of support in the form of the following assistance instruments:
- Rescue aid, which is intended to provide the company with financial liquidity during the period necessary to develop a restructuring plan,
- Temporary restructuring support to provide financial support to the company to take corrective action based on a simplified restructuring plan,
- Restructuring aid for companies that have developed a restructuring plan but are unable to bear the costs of its implementation alone.
The support offered by ARP takes the form of an interest-bearing loan (in the case of the third instrument, there are also other forms of support, which are presented in the article presenting aid instruments under the New Chance Policy programme).
Form of loan
The loans granted by ARP are of a liquidity nature and their main purpose is to enable the entrepreneur to finance expenses related to the maintenance of the company’s current operations and ensure its financial liquidity for the time necessary to implement restructuring measures aimed at restoring its long-term ability to compete in the market.
Liquidity, understood as the ability to pay the required liabilities in a timely manner, can be described as a driving force for business and is mostly related to short-term transactions, which are often extremely difficult to plan. Lack of appropriate measures may lead to a loss of liquidity, which has many negative consequences for the company, including: deterioration of the competitive position of a given entity in the market, loss of flexibility in making key business decisions and, consequently, limiting the development of the company or even its liquidation.
The entrepreneur will be able to use the obtained funds to improve financial liquidity, maintain operations or cover current costs. The obtained funds can be directed, among others, to: employee salaries (including components due to the Social Insurance Institution (ZUS), US), public-private liabilities, purchase of raw materials or goods, commercial liabilities, costs of using the infrastructure, as well as payment of overdue liabilities.
A new chance
An additional “cash injection” will enable the entrepreneur to restore financial liquidity in the period necessary for the preparation of the restructuring plan or its systematic implementation (depending on the form of aid chosen) in order to rebuild the long-term ability of the company to compete on the market. Skillfully used funds received from the New Opportunity Policy program can have a stimulating effect on the company, enabling it to increase capacity utilization, restoring the company’s liquidity and credibility in relations with its most important contractors, which in the long term should ensure the success of undertaken restructuring activities.
Text written by CMT Advisory experts.