- PRELIMINARY SPECIFICATIONS
Emergency Ordinance no. 130/2020 regarding some measures for granting financial support from non-reimbursable external funds, related to the Competitiveness Operational Program 2014-2020 (hereinafter referred to as “COP”), in the context of the crisis caused by COVID-19, as well as other measures in the field of European funds (“GEO no. 130/2020” ) was adopted on July 31, 2020 and published in the Official Gazette no. 705 on August 6, 2020.
During the state of emergency / alert, small and medium enterprises (hereinafter referred to as “SMEs”) regulated by Law no. 364/2004, were faced with problems caused either by the lack of consumers, in which case their activities were strongly affected by the decrease in turnover, or by the fact that the activities carried out by SMEs were banned or restricted by military ordinances.
This led to a blockage of economic activities at the national level, making it necessary to involve the Government by providing financial support.
- FINANCIAL SUPPORT FROM NON-REFUNDABLE EXTERNAL FUNDS
- Beneficiaries and forms of support
According to art. 1 para. (1) and (3) of GEO no. 130/2020, the following categories may benefit from financial support from non- refundable external funds:
ii) Authorized natural persons (hereinafter referred to as “ANPs”) and individual medical practices (hereinafter referred to as “IMP”)
For the first category (SMEs), the Government provided the following forms of financial support, regulated in art. 1 paragraph (2) of GEO no. 130/2020.
- Micro-grants granted from non-reimbursable external funds in the form of a lump sum;
- Grants for working capital granted in the form of a lump sum and percentage of turnover;
- Grants for productive investments granted from non-reimbursable external funds based on an evaluation of the submitted investment project.
With regard to the second category (ANPs and IMPs), the ordinance provides only one form of financial support, namely micro-grants granted from non-reimbursable external funds in the form of a lump sum.
- Micro-grants granted from non-reimbursable external funds
According to art. 4 of GEO no. 130/2020, the micro-grants have the value of 2,000 EURO, and can be granted only once, in the form of a lump sum. The amount of funds allocated for micro-grants in the COP is EUR 100,000,000, of which EUR 85,000,000 is allocated from the POC budget and EUR 15,000,000 from the co-financing from the state.
Article 5 of GEO no. 130/2020 establishes the categories of beneficiaries that can apply for obtaining microgrants, as follows:
- SMEs that prove through their financial statements that they do not have employees with an individual employment agreement on December 31, 2019
- ANPs and NGOs with economic activity in one of the fields provided in the Annex of the ordinance, among which we mention: retail trade except motor vehicles and motorcycles, wood manufacturing, IT services, publishing, dissemination and program transmission
- ANPs and IMPs on the condition that they have been involved in the transport, equipment, diagnosis and treatment of patients diagnosed with COVID-19 and have not benefited from the medical incentive granted under GEO no. 43/2020 for the approval of some support measures settled from European funds, as a result of the spread of COVID-19.
Beneficiaries shall cumulatively meet the following conditions, established under art. 6 of GEO no. 130/2020:
- Have carried out the activity for a period of at least one year before the date of submission of the grant application
** The category exempted from this provision includes ANPs and IMPs for which the start of the activity may have taken place until the date of 1st February 2020.
- The turnover obtained in the financial year prior to the submission of the financing application is at least the RON equivalent of 5,000 EURO
** The categories exempted from this provision are ANPs and NGOs (with economic activity in one of the fields from the Annex) and also ANPs and IMPs involved in the transport, equipment, diagnosis and treatment of patients, diagnosed with COVID-19 and who did not benefit from the financial incentive granted by GEO no. 43/2020.
- The activity is maintained for a period of at least 6 months from the granting of the financial support.
Regarding microgrants, art. 7 of GEO no. 130/2020 provides the expenses categories that can be covered by the use of allocations from external funds, among which we mention: expenditure on raw material stocks, debts to suppliers (including utility providers), expenses on repairs necessary for the carried out activity, equipment expenses of medical protection against the SARS-COV-2 virus, expenses regarding the payment of debts to the state budget.
The beneficiary will also submit a declaration on its own responsibility assuming that the use of microgrants for purposes other than those provided for in the ordinance will lead to the recovery of the State aid granted together with the related accessories.
A last important aspect regarding microgrants is related to the final beneficiary who must submit to the bank a progress report on the expenses incurred, within 90 days from the date on which the transfer was made to his bank account.
Failure to submit or submit the missing information report entitles the competent authorities to initiate legal proceedings to recover the financial support granted.
- Grants for working capital granted to beneficiaries
According to art. 10 para. (1) of GEO no. 130/2020, by award of working capital grants shall be understood as allocation of non-reimbursable external funds in the form of a lump sum, in accordance with European provisions.
The allocation of this financial support for working capital is made on the basis of a percentage of turnover, especially for SMEs whose activity has been affected by the spread of the SARS-COV-2 virus.
The value of the financial support is established by art. 11 para. 1 of GEO no. 130/2020 as follows:
- For SMEs with a turnover for 2019 between 5,000 and 13,500 EURO – the value of the grant is 2,000 EURO
- For SMEs with a turnover for 2019 between 13,501 and 1,000,000 EURO – the value of the grant is 15% of turnover without exceeding the amount of 150,000 EURO.
** For SMEs with a turnover over 1 million euros, the maximum value of the grant is 150,000 EURO
Art. 12 of GEO no. 130/2020 establishes the fields of activity of SMEs in order request the financial support, namely: restaurants, hotels, coffee shops, food industry, travel agencies, transport services.
In order to request the financial support, SMEs shall cumulatively meet the conditions established by art. 13 of GEO no. 130/2020, namely:
- They obtained a certificate of emergency situations based on GEO no. 29/2020 regarding some economic and fiscal-budgetary measures (“GEO no. 29/2020”)
- ii) They recorded a profit from the current activity, in one of the last two financial years before the submission of the financing application
- Have a co-participation in setting up the working capital at least 15% of the grant amount (therefore, in order to grant this financial support, the beneficiary must make available 15% of the grant amount)
- iv) Maintain or supplement the number of employees, for a period of at least 6 months from the date of granting the financial support
** The agreements for seasonal workers and day laborers are exempt from these provisions.
Regarding the emergency certificate, art. 13 para. (2) stipulates the possibility for the beneficiary to request this certificate between 1st August and 15th September 2020, on condition that the beneficiary is part of the category of economic operators whose activity was affected in the context of the COVID-19 pandemic, during the state of emergency. This certificate states on the basis of the declaration on its own responsibility that the beneficiary registered a decrease of income / receipts by at least 25% in March, April or May 2020 compared to the average of January and February 2020 or partial / total interruption of activity as a result of decisions issued. by public authorities during the state of emergency.
By working capital grants, the beneficiaries can cover the same types of expenses as in the case of micro-grants (art. 14 of GEO no. 130/2020).
A final important aspect regarding working capital grants is related to the final beneficiary who must submit to the bank a progress report on the expenses incurred, within 180 days from the date on which the transfer was made to his bank account. . Failure to submit or submit the missing information report entitles the competent authorities to take legal action to recover the financial support granted.
- Investment grants to SMEs
According to art. 17 of GEO no. 130/2020, investment grants means support from non-reimbursable external funds for beneficiaries who implement investments either in the current field of activity or in a different field. The same article also states that financial support is granted only for investments necessary for the following purposes:
- Expanding production capacity and extension of service capacities
- The achievement of new units to develop production capacities and services
- Rehabilitation or modernization of production and service units
The value of investment grants is established by art. 18 of GEO no. 130/2020, in the amount of 50,000 EURO – 200,000 EURO, depending on the financing needs of the submitted projects.
It is important to note that the amount of grants mentioned above does not include the co-financing of the beneficiaries. Thus, the beneficiaries must participate with a percentage of at least 15% of the value of the requested grant, namely 30% for the beneficiaries from the Bucharest – Ilfov region.
Article 19 of GEO no. 130/2020 establishes the areas of investment supported by non-reimbursable external funds, among which we mention: food industry and related industries, automotive industry, energy and construction field, transport services and tourism, pharmaceutical industry, education and health services, trade.
According to art. 21 of GEO no. 130/2020, the beneficiaries of investment grants must cumulatively meet the following conditions:
- The current activity is carried out for at least one year before the submission of the financing application
- The requester has recorded a profit from the current activity, in one of the financial years of the last 2 years before the submission of the financing application
- Undertakes to ensure the operation of the business for a period of at least 3 years after the termination of the project implementation period
- Achieves at least 50% of the value of revenues planned under the business plan in the first 2 years of sustainability, and the difference by the end of the third year
- They have their own co-financing of the project in a percentage of at least 15% of the value of the investment project for the less developed regions, respectively of at least 30% for the Bucharest – Ilfov region.
- Undertakes to present justify documents regarding investment costs.
Article 22 of GEO no. 130/2020 establishes four selection criteria for financing investment projects, as follows:
- Criteria for assessing the cost-effectiveness of project investment
- Criteria for co-financing investment projects
- The report between the realized profit and the requested grant
- Affiliation of the field of activity – priority will be given to areas of activity in which in 2019 imports were higher than exports
The expenses that can be covered based on the financial support for investments are provided by art. 23 of GEO no. 130/2020. Among these we mention: expenses with the development of construction, acquisition of equipment, machinery and installations, expenses with connection to utilities, etc.
An important aspect is provided by art. 24 of GEO no. 130/2020 which establishes the categories of expenses that are not covered by investment grants, namely: salary expenses, purchase of raw materials, consumables, repairs and maintenance. These costs are taken over by the final beneficiary.
A last important aspect is related to art. 31 of GEO no. 130/2020 which stipulates that the funds granted to the beneficiaries left unusedshall be returned within 30 days from the termination of the agreement for granting state aid.