REI: Over EUR 500 million of increased funds for companies that want to access up to 50 pct. investment financing of at least EUR 1 million

The Romanian government has increased the non-reimbursable funds for investments by over 500 million euros, which can be obtained through state aid regulated by the Government Decision (GD) 807/2014, which supports projects aimed at developing or increasing production for most companies and sectors in the Romanian economy.

The Executive has published this month the Revision 5 of the Applicant’s Guide for State aid financing projects regulated by GD 807/2014, which provides support of up to 50% of the value of investments, but no more than 37,5 million euros. The new version proposed by the government brings a series of news and additions to the previous version published a year ago.

In this way, the funding ceiling was extended by an additional EUR 550 million, increasing the total amount of funds from around EUR 1 billion to EUR 1,45 billion, while new areas of activity in the construction industry were included in the eligibility list.

“If until now State aid could be obtained by companies active in the manufacturing and processing industry, this month has also included road and residential construction  companies, codes CAEN 41, 42 or 43, i.e. Construction of buildings, Civil engineering works or Special construction works”, explains Roxana Mircea, REI Finance Advisors partner, one of the largest consultancy companies specialized in attracting financing through European funds and state aid.

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The section F CAEN Code ‘construction’ includes new works, repairs, additions and modifications, prefabricated buildings or structures on the site and also temporary constructions. General construction means the construction of residential buildings, office buildings, shops and other public and utility buildings, farm buildings, etc. or engineering (civil engineering) construction such as motorways, streets, bridges, tunnels, railways, aerodromes, ports, water engineering works, irrigation systems, sewerage systems, industrial devices, pipes and power lines, sports bases etc. These works can be carried out on their own account, on the basis of fees or contracts. Some work and sometimes all practical work can be carried out by subcontractors.

It also includes activities relating to the repair of buildings and civil engineering works. This section covers building construction (division 41), civil engineering works (division 42), and special construction activities when carried out as part of the construction process (division 43). Renting of construction equipment with an operator is classified within the class of construction activity carried out with this equipment. This section also includes work on developing construction projects for buildings or civil engineering works by bringing together financial, technical, and physical means for the realization of construction projects for subsequent sale. If these activities are not carried out for the subsequent sale of construction projects but for their operation (e.g. rental of premises in these buildings, production activities in these plants), the unit will not be classified here but according to its principal (operational) activity, i.e. real estate transactions, manufacturing etc.

“In addition to the funds top-up and new CAEN codes additions, the Government has decided that on-the-spot verification of the existence of assets and of the declarations/documents relating to expenditure made by the beneficiary firms will be suspended until 31 December 2021, this further simplifies the process of obtaining the financing Agreement. In practice, it will no longer be necessary to justify the expenses, or to detail the equipment to be purchased, and this process will be carried out at a later stage. We see an even higher appetite from the construction companies as a result of the changes made”, said Roxana Mircea.

REI team will submit over 50 investment projects through GD 807/2014 this year: Neamt, Sibiu and Dolj, top counties with investments

More than 50 projects will be submitted in 2021 by the REI consultants team in 2021, with four projects that have already received funding in the last 3 months.

“Production of construction materials – prefabricated, concrete, aggregates -, production of raw materials for tissue, toilet paper or foil, i.e. medical clinics and hotels were the main areas of activity that submitted for non-reimbursable funds in the first 9 months of this year. Neamt, Sibiu and Dolj were the counties that are leading the attraction of financing through the state aid set up by the GD 807 for us”, said Roxana Mircea.

According to REI, the average value of the projects was around 5 million euros, and they concerned, on the one hand, the purchase of equipment or the construction of production facilities and the purchase of equipment.

“We estimate that we will get funding for more than 300 companies this year, both through GD 807/2014, which provides non-reimbursable financing through State aid for development investments, OGA 130 – Measure 2, the Scheme with the support component of companies affected by the pandemic, as well as Schéma HoReCa and POIM 6.4″, added Roxana Mircea, REI Finance Advisors partner.

GD 807/2014, the only currently available source of non-reimbursable financing for investments

The Scheme covered by the GD 807/2014 is the only source of non-repayable financing for investments available at the moment, where there is an open session and projects can be submitted continuously up to 31.12.2023 and can be implemented gradually, until 31.12.2028. Acquisitions can also be started once the business plan has been submitted to the Ministry and the acquisition procedure has been carried out. There is no need to wait for the agreement to be issued for an additional 3-4 months period, unless the beneficiary wishes so.

The scheme grants 10% non-reimbursable financing for projects implemented in Bucharest, 35% – Ilfov and the West of the country (counties of Arad, Caraș-Severin, Hunedoara and Timiș) and 50% non-reimbursable financing in the rest of the country.

Eligible for funding are both start-ups, owned by shareholders who are no longer involved in other companies operating in the same field, SMEs or large companies, with thousands of employees. The condition would be that the applicants had a profit in at least one of the last 3 years of activity.

The list of eligible expenditure includes new investments, the construction of buildings from scratch, the extension of existing buildings or a simple acquisition of equipment leading to the diversification of the company’s products, the increase in capacity or the change in technology flow. It shall not be possible to renovate buildings or purchase existing buildings.

REI Finance Advisors is the only consultancy company in Romania, specialized in attracting non-reimbursable financing through European funds or state aid, with 9 regional offices. The REI team writes the projects and implements them with the beneficiaries until the final tranche is received, and support can be provided at the company’s request also during the project monitoring period.