Czech Republic: "COVID II" state aid programme provides state-secured loans

After termination of the receipt of loan applications under the “COVID I” state aid programme aimed at entrepreneurs or small and medium-sized enterprises, the Czech government officially announced on Monday, 30 March 2020 that applications for the “COVID II” programme can be submitted starting this Thursday, 2 April 2020. Under the new “COVID II” programme, loans are to be provided by commercial banks and not the Czech-Moravian Guarantee and Development Bank (“CMGDB”) as was the case under COVID I, while the state will newly secure the loans and offer financial aid for loan interest through the CMGDB.

In the meantime, the Czech authorities have been processing the loan applications from the previous COVID I programme. It seems that applications are being processed rather quickly since according to the CMGDB the first applicants are already receiving approved funds.

We hereby bring you a summary of currently known information pertaining to the COVID II programme.

In what form and for what purpose is the state aid to be granted?

• The state (through the CMGDB) will secure up to 80% of commercial loans for the maximum period of 3 years, and it is possible to apply for financial support of up to CZK 1 million on the loan interest.
• Loans (to be secured by the state) are limited to CZK 15,000,000.
• The loans are intended to cover in particular operational costs, such as salaries, rent, utility costs or supplier-customer invoices.

Who is generally entitled to apply for the state-guarantee and loan-interest loan?

• Entrepreneurs or small and medium-sized enterprises with a trading permit in the Czech Republic (branches/business premises located in Prague region are excluded so far, although companies with their registered seat in Prague may be able to apply for funds if these are solely intended for their branches outside of Prague).
• Applicants who have been forced (due to the approved crisis measures) to limit or shut their business operations.
• The applicant’s business activities must be included in the “supported economic activities” list (the list of supported activities is very extensive, including the manufacturing industry, logistics, leisure and accommodation).
• The applicant must not be bankrupt and may not have any outstanding debts owed to the state authorities.

How to apply for the loan and loan guarantee

• Loan from commercial banks
  
  • Loan applications should be submitted directly to the commercial banks which have joined the COVID II programme.
  • The application terms and conditions therefore depend on the individual banks’ rules (as of today, most of the Czech major retail banks have joined the COVID II programme).
• Loan guarantees and financial aid for loan interest
  
  • Applications for loan guarantees and financial aid for loan interest must be submitted separately to the CMGDB (with the loan agreement from the commercial bank attached) starting this Thursday, 2 May 2020.
  • The application form (and its formal conditions) can be found HERE. More information on the call (in Czech: Výzva) can be found HERE.

We are ready to carry out an assessment of your claim and provide you with support on the completion of your application.