Forms of support provided by Industrial Development Agencies
The New Chance Policy is an aid instrument offered to entrepreneurs by the Industrial Development Agency, provided for in the Act of 16 July 2020 on granting public aid for rescuing or restructuring entrepreneurs. The programme, resulting from the needs of companies in a difficult economic situation, enables entrepreneurs to benefit from public support for developing and implementing restructuring measures. Within the framework of the New Chance Policy programme, the Industrial Development Agency has prepared three forms of support for entrepreneurs in the form of the following aid instruments. You can read about the benefits of using the support: Assistance of the Industrial Development Agency – benefits for entrepreneurs.
Rescue aid is an aid instrument which is to provide the entrepreneur with financial liquidity for the period necessary to develop a restructuring plan or carry out an efficient liquidation, and the amount of aid will be calculated each time on the basis of the individual situation of the entrepreneur. If support under Rescue Aid turns out to be insufficient, an entrepreneur from the SME sector will be able to apply for additional support in the form of Temporary Restructuring Support and thus extend the repayment period of granted financing to 18 months (this will be subject to separate analysis and evaluation).
The addressee of rescue aid may be a micro, small and medium-sized entrepreneur. A large entrepreneur will also be able to take advantage of this form of aid after receiving notification from the European Commission.
The support takes the form of a loan granted for a maximum period of 6 months, the interest rate of which is calculated according to the following formula: prime rate published by the European Commission on its website, in force on the day of granting the loan + min. 4 p.p.
Rescue aid may not be used to finance expenses related to the acquisition of assets or expenses incurred to expand the scope of business activity of an entrepreneur in a difficult economic situation, unless they are necessary to maintain the business activity of that entrepreneur in the period for which the aid was granted.
Temporary restructuring support
A form of support intended for entrepreneurs who are able to carry out restructuring on their own on the basis of a simplified restructuring plan, but who require financial support to ensure its effectiveness. Temporary restructuring support functions both as an independent aid instrument and a continuation of rescue aid.
The aid instrument is addressed to micro, small and medium-sized enterprises. Large entrepreneurs cannot benefit from this form of aid.
The support takes the form of a loan granted for a maximum period of 18 months, the interest rate of which is calculated according to the given formula: prime rate published by the European Commission on its website, in force on the day of granting the loan + min. 4 p.p.
Temporary restructuring support is conditional on the implementation of a simplified restructuring plan.
Restructuring aid is intended for entrepreneurs who are not able to bear the costs of restructuring on their own, but who have developed a coherent and far-reaching restructuring plan that will enable them to restore their long-term ability to compete on the market. The term “long-term ability to compete on the market” should be understood as the ability of the entrepreneur to cover the costs of the performed business activity, including depreciation and financial costs, without the need to support this entrepreneur again with public funds coming from rescue or restructuring aid for at least 10 years. Restructuring aid may only constitute a supplement to the entrepreneur’s own contribution, which is a contribution to the financing of restructuring costs.
Support cannot be used to finance new investments, unless it is necessary for the entrepreneur to regain long-term ability to compete in the market. This form of support can be used by: micro, small, medium and large entrepreneurs.
Restructuring aid is granted for the implementation of the restructuring plan and may be granted in the form of:
- taking up shares or stocks in the increased share capital,
- taking up the bonds,
- changes in loan repayment dates,
- conversion of a loan into company shares or stocks,
- relief in the execution of the administrative fine.
In case of restructuring aid, the entrepreneur’s own contribution of at least 50% is necessary. With regard to a micro, small or medium sized entrepreneur, if the total amount of aid granted and applied for, granted within the same restructuring process, does not exceed the equivalent of EUR 10 000 000, the share of the own contribution in the restructuring costs shall be equal to EUR 10 000 000:
- 25% – for micro and small businesses,
- 40% – in the case of medium-sized enterprises.
During the process of applying for support from the New Opportunity Policy programme the entrepreneur should bear in mind the following:
- the call for applications is continuous,
- The aid received is repayable and not subject to redemption,
- The submitted application is subject to individual assessment. The granting and amount of aid may be subject to the establishment of securities.
Text written by CMT Advisory experts.