The Emergency Government Ordinance no. 29/2020, published in the Official Gazette no. 230 of 21 March 2020, details the financial support measures enacted by the Romanian Government for supporting the economy and companies affected by the spread of COVID-19 virus.
I. What are the new measures?
The support measures consist in State guarantees and interest subsidies for investments and loans/ working capital credit lines.
- State guarantees for investment loans:
The State, through the Ministry of Public Finance, will guarantee, for one or more loans for investments, up to 80% of the amount of the loan, excluding interest, commissions and bank charges related to the guaranteed loan.
The maximum cumulative amount of state-guaranteed funding per beneficiary under this facility is of RON 10,000,000.
- State guarantees for loans/ working capital credit lines
The State, through the Ministry of Public Finance, will guarantee, for one or more loans/credit lines for working capital granted to:
- Medium enterprises – up to 80% of the amount of the loan, excluding interest, commissions and bank charges related to the guaranteed loan.
The maximum amount of credit spending/ working capital credit lines granted to a beneficiary may not exceed the average of the working capital expenditure in the last 2 fiscal years, up to a limit of RON 5,000,000.
- Small enterprises – up to 90% of the amount of the financing, excluding interest, commissions and bank charges related to the guaranteed loan, up to a maximum of RON 1,000,000.
- Micro-enterprises – up to 90% of the amount of the financing, excluding interest, commissions and bank charges related to the guaranteed loan, up to a maximum of RON 500,000 lei.
The maximum amount of each loan granted to a beneficiary may not exceed the average of the working capital expenditure relating to the last 2 fiscal years, within the limits of the thresholds provided above.
For SMEs that have not submitted financial statements at the time of the application for the guaranteed credit, the maximum amount of financing for working capital credits lines will be calculated as double the average of the working capital expenditure in the monthly balances.
The maximum financing period shall be 120 months in the case of investment loans and 36 months in the case of working capital credits lines. The working capital credit lines may be extended by a maximum of 36 months and shall be repaid in the last year of extension.
- 100% subsidization by the State of the interest on loans/lines of credit for investment and the financing of working capital.
The interest subsidy period starts from the moment the loans/credit lines are signed after the entry into force of EGO 29/2020 and may last until 31 March 2021.
The interest subsidy shall be approved annually by law for the first year and for the next 2 years only when the economic growth estimated by the National Strategy and Forecast Commission for this period is below the level recorded in 2020.
- Payment by the State of the FNGCIMM administration fee
The Ministry of Public Finance will cover from the budget the administration fee related to the costs of granting and monitoring the guarantees by FNGCIMM (the state-owned fund which guarantees the credits for SMEs).
II. Who can benefit from the new support measures?
The beneficiaries of these measures are the economic operators which:
- carry out their activities under (i) the Companies Law no. 31/1990, (ii) Government Emergency Ordinance No. 44/2008, (iii) Law No. 1/2005 or (iv) Government Emergency Ordinance No. 6/2011;
- satisfy the conditions for classification in the category of SMEs laid down in Law no. 346/2004 on stimulating the establishment and development of small and medium-sized enterprises, as amended and supplemented.
SMEs are the undertakings which cumulatively fulfil the following conditions:
- have an average annual number of employees of less than 250; and
- achieve a net annual turnover of up to EUR 50 million, equivalent in lei, or hold total assets not exceeding the lei equivalent of EUR 43 million, according to the last approved financial statement. „Total assets” means fixed assets plus current assets plus advance expenses.
SMEs are further classed into the following categories:
- micro-enterprises: have up to 9 employees and achieve a net annual turnover or have total assets of up to EUR 2 million, equivalent in RON;
- small enterprises: have between 10 and 49 employees and have a net annual turnover or have total assets of up to EUR 10 million, equivalent in RON;
- medium-sized enterprises: have between 50 and 249 employees and achieve a net annual turnover of up to EUR 50 million, equivalent in RON, or hold total assets not exceeding the equivalent in RON of EUR 43 million.
In addition to the above criteria, the qualification as an SME may also be influenced by the existence of structural and control links between the company in question and other undertakings.
III. How can the companies apply for the new support measures?
The newly adopted measures have been integrated in the Support Program for Small and Medium-sized Enterprises INVEST IMM, enacted by Emergency Government Ordinance no. 110/2017, approved with amendments by Law no. 209/2018.
The program is implemented by the Ministry of Public Finance in cooperation with FNGCIMM.
More information on the conditions, criteria and the approval flow are available HERE.