REI: More than 500,000 unemployed and over 300,000 firms could face insolvency or go bankrupt

Over 500,000 unemployed and more than 300,000 firms could face insolvency or go bankrupt in the coming period shows one of the darkest scenarios for 2021, as the economic impact of COVID-19 for companies and employees will be very strong and the effects will only be felt to start next year.

According to REI Finance Advisors, one of the most dynamic consultancy companies specialized in attracting European funds and state aid for companies active on the Romanian market – a solution to overcome this economic deadlock could be to access non-reimbursable funds, with European or Romanian governmental support. There are also projects aimed at supporting companies that have been recording losses and are still facing financial problems.

According to the latest data, Romania attracted 12.8 billion euros by August 28, 2020, representing 42,3% of the total allocation for our country, in the 2014-2020 European financing program, with a total budget of over 460 billion euros, being well below the level of the other EU Member States.

According to the European Commission (EC), during the period 2014-2020 Romania could have benefited from a budget of more than 36,7 billion euros in non-reimbursable funds, being the sixth EU country with the most generous budget for European investments. Poland was the country with the highest European allocation of over 86 billion euros.

What type of grants companies can access, even if they are recording losses

The working capital grants, through GEO 130/2020, also known as generic Measure 2, represent a real breath of oxygen for many companies.

‘Hotels, restaurants (HoReCa industry), transport companies or publishers, which are heavily affected by the COVID crisis, must submit their projects on 22^nd of October, starting at 10:00 and submit the projects within 10-20 minutes since opening as there is a risk that funds will run out very quickly, considering the allocation of only EUR 350 million”, said Roxana Mircea, partner REI Finance Advisors.

The investment grants, also known as Measure 3, benefit from an allocation of EUR 550 million and finally have an approved scoring grid, so a company can know if it scores the highest and can thus prepare the project for submission in November.

The minimum grant is EUR 50,000, and the maximum is EUR 200,000.

“In order for a company to access the maximum grant and to obtain 100 points it should have made operating profits of 67.000 euros / 2019, co-finance 35,1% per country and 45,1% on Bucharest-Ilfov, RIR<5, And the CAEN code of the activity should have a negative balance in Romania”, said Roxana Mircea.

The axis for the digitalization of the companies is one of the much-awaited funding, which is indispensable in the current context, with an allocation of EUR 150 million.

For this axis, the advisory guide was published, with a very high chance of opening the session in December-January.

For companies that recorded losses in 2019 or estimate a drop in revenues this year or plan investment projects of at least 1 million euros over the next 8 years, the funding axis through GD 807/2014 provides access to grants of at least 500.000 euros, maximum 37,5 million euros, with an allocation of 10% in Bucharest, 35% – Ilfov county and 50% in the rest of the country.

“In the case of GD 807/2014, both start-ups and SMEs or large companies are eligible, including costs related to the construction of production facilities, hotels, hospitals, service facilities and equipment purchases. The GD 807/2014 investment can also have a 20% software component. No expenses are eligible for renovation of the hotel/hall or furniture purchase. The submission session continues, it has just been extended and financing agreements can be issued by 31.12.2023 and investments can be implemented by 31.12.2028. The projects are evaluated very quickly, in about 2-3 months, but in any case companies can start making the investment immediately after submitting the project to the State aid Department of the Ministry of Public Finance”, said Roxana Mircea, REI Finance Advisors partner.

Tips for successfully accessing non-reimbursable funds:

Carefully choose a consultant with experience and expertise on the axis which you are claiming funds for;
Ask for a fair and complete project to be submitted and implemented without financial corrections;
The technical team is equally important in the case of projects with a construction component;
Pay attention to the scoring grid, financial allocation/possible reallocations and the sizing of an investment project based on the sources of co-financing;
Prepare an early time projects, rigorously or designate a person within the company to manage this project with the consultant until the final tranche is received, but also during the monitoring period.

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