Up to EUR 1 billion COVID Scheme funds for Pandemic affected Romanian businesses. How to obtain financing?

European Commission has purposed an EUR 2.4 trillion economic recovery package for all EU states and economic sectors affected by the COVID pandemic, mainly to minimize and to fight the possible material losses which could appear due to the global crisis generated by the Coronavirus.

Ensuring the working capital necessary for businesses affected by COVID-19 is the main priority for the Romanian Government and European Union due to temporary closed activities, a reduced consumption rate or an interruption in the supply chain, the total investment budget reaching nearly 1 billion euros (https://gov.ro/fisiere/programe_fisiere/Planul_Na%C8%9Bional_de_Investi%C8%9Bii_%C8%99i_Relansare_Economic%C4%83.pdf).

“In the economic recovery plan grants and financing support programs from external non-reimbursable funds and from the state budget are laid down meant to cover the work capital by financing the need for investment, provided with schemes for digitalisation, but also measured to support the businesses that have been seeing a drop of income in the past months. The total budget for investments in the main sectors affected by the Pandemic has reached over 1 billion euros, and all major sectors of the economy are being targeted. Our team of specialists are already working on a series of projects, the main target being to successfully represent our clients that made more than 1 million EUR of revenue and over 100,000 EUR of profit in the last year”, said Roxana Mircea, managing partner REI Finance Advisors.

COVID Scheme: The main support measures proposed by the Romanian Government

A number of six measures have been proposed by the authorities to fight the Pandemic crisis and to financially support the companies to ensure the work capital, to enhance the new investments, to support the sports sector and also the independent companies or the ones that have been affected in this period, especially the stores inside the big shopping centers that have been closed.

1. Grants for SME investments and economic reconversion – EUR 550 million

The main objective for this scheme is to provide grants for both the economic reconversion of the SMEs, and for the new investments needed for the economy. The total budget for this measure is about 550 mln. EUR, where 415 mln. EUR represents EU funds, 62 mln. EUR co-financing and 72 mln. EUR own contribution.

The value of the grant varies between 50,000 EUR and 200,000 EUR. The beneficiary must contribute with more than 15% of the total investment – 30% for the businesses located in Bucharest or Ilfov county.

“The eligible companies must have recorded profit in the last two fiscal years, must have a minimum 1 year of operational activity, and should assume the current activity of the firm for many years and to offer guarantees that they will obtain a minimum of 50% of their expected revenues. For a high score we do recommend the companies to apply for a non-reimbursable financing a doubled profit from 2019 and to ensure the co-financing with 46% of the projects in Bucharest and Ilfov county, respectively 36% in the other parts of Romania”, added Roxana Mircea.

Amongst the eligible financing sectors there are the food industry, automotive, energy and equipments for energy efficiency, tourism, construction and construction materials, transportation, metal/wood work, textile confections, pharma and medical equipments, education: nurseries, kindergarden, health services: medical practices, medical devices, creative industries, land acquisitions, event- organising, information technology, Artificial Intelligence (AI), nanotechnology or production technologies.

2. Ensuring the work capital for SMEs restarting their businesses – EUR 350 million

The main objective of this measure is to ensure the work capital that is necessary for the SMEs activities affected by the COVID-19 crisis in HORECA businesses, tourism, transport or event organising companies. The measure has a total financing of 350 mln. EUR – of which 265 mln. EUR are EU funds, about 40 mln. EUR co-financing from the state budget and nearly 46 mln. EUR co-participation from the beneficiary.

The work capital support shall be granted of no more than 15% of the total revenue made in the previous financial exercise, but no more than 150,000 EUR.

“Up to 3,500 beneficiaries are estimated to take possession for restarting the SME activities, but only if there is an average of 100,000 EUR per project. The applicants must own an emergency certificate, to have had a profit in the last two years, to have a co-financing of 15% and to take on the current activity for at least 6 months”, said Roxana Mircea, managing partner REI Finance Advisors.

3. Grants for investments in the SMEs renewal energy – EUR 200 million

The objective for this Scheme is to ensure grants for solar panels installations of maximum 27 kW, but also for the acquisition and installing power stations for electric vehicles. The total budget for this scheme is 200 mil. EUR, half from the Environment Fund, the other from the Ministry of Economics, Energy and Business Environment (MEEMA) budget.

The maximum grant offered is 30,000 EUR and can be accessed by companies in the hotel industry or automotive.

4. Grants for sport clubs and sport activities – EUR 180 million

The main objective in this scheme is to finance the sport clubs that have suffered due to COVID-19 crisis. With a total budget of 180 mln. EUR, all coming from the local authorities, the financing is meant to ensure investments in the sports infrastructure. The total grant is no more than 200,000 EUR and can be accessed only once.

Up to 1,500 beneficiaries can access the funds for investments in the sports facilities for kids and under 18 yrs old, recovery centers for sports people, medical offices specialised in sports medicine and others.

5. Grants to support the SMEs – EUR 100 million (EUR 2,000 for up to 50,000 companies)

This scheme is supposed to help the small businesses, especially the individual ones, affected by the Pandemic, and the financing is focused on ensuring the work capital. The total value of the Scheme is 100 mln. EUR – 85% EU funds, 15% state co-financing.

The value of the micro grant is 2,000 EUR, can be accessed only once, and about 50,000 companies are expected to submit their request.

The beneficiaries are SMEs with no employees or Self-Employed Persons (PFA – RO) which have activities in arts or shows, healthcare – especially the ones that have been involved in COVID-19 treatments.

6. Scheme for commerce and services affected by COVID-19 – RON 160 million (approx. EUR 33 million)

This scheme is meant to support a non-reimbursable fund to the economic operators whose activity has been affected by COVID-19, tenants that have kept their stores closed during the emergency state in the big shopping centers all over the country.

In this case, the grant represents up to three months of rent, about 2,000 retailers concerning this benefit.

The ordinance for financing SMEs due to Pandemic, published and subject to public consultation

On the 9^th of July, the Romanian Government published the Ordinance for financing SMEs due to COVID-19 pandemic, being subject to public consultation (http://www.economie.gov.ro/transparenta-decizionala/proiecte-in-dezbatere-publica).

“After the period of observations, we expect that the final form of the Ordinance will be published at the beginning of August, followed by the Applicant’s Guideline by the end of next month so that in September to officially start the funding session. We strongly recommend to all the applicants to draw up a fair score based on the official documents published for this Scheme and to try reaching the highest score for a smaller fund, preferably the double-profit made last year for the Scheme no. 3. We suggest to all the applicants to sign a contract with an advised consultant and to ask for the guarantee of a correct and fully documented project, or to ask the consultant for a refund or even for penalties if not. Moreover, for a successful project to be accepted, it must be submitted in the first day or first days from the opening session, so that the chances of benefit for support are maximized. Another recommendation aims at the budget preparation for Schemes 2 and 3. On this matter, there must be a minimum of one offer for each wanted equipment, to draw the business plan by the book – containing a full description of the business, and also earnings and expenses expectations for the new investment projects”, added Roxana Mircea.

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