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COVID-19: Poland Announces Another Support Package For Business

In order to counteract the effects of the COVID-19 epidemic and the effects of economic slowdown, the Polish government has announced another PLN 100 billion (EUR 22 billion) support package for Polish business. The main goals of the program are supporting the liquidity of enterprises and maintenance of employment.

The program is to be serviced by the Polish Development Fund (Polski Fundusz Rozwoju (PFR)), a government-owned company tasked with offering instruments supporting the development of companies, local governments and individuals, that invests in sustainable social development and national economic growth. PFR will gather 90% of the needed capital by issuing bonds, with Poland’s central bank expected to be the main buyer.

The support program consists of three tranches:

Support for large enterprises – PLN 25 billion

Large enterprises (those with more than 250 employees) may apply for liquidity assistance in the form of loans and bonds (with a maturity of 2 years with potential 1 year extensions) – up to PLN 1 billion, preferential loans with a maturity up to 3 years – up to PLN 750 million. Further, the government may also provide equity injections – PFR may subscribe for new shares in the business – on market terms and conditions (up to PLN 1 billion for one enterprise). The aid for large businesses will require individual financial analysis and will be granted by PFR itself, whereas support for smaller businesses will be granted through commercial banks cooperating with PFR. Up to 75% of the loans may be forgiven, although how this forgiveness will be applied to large enterprises remains to be seen.

Support for small and medium enterprises – PLN 50 billion

The scheme is based on repayable grants to enterprises, that are to be used for continuing business activity and preservation of employment. The support will be granted for 36 months, in amount up to PLN 3.5 million for one enterprise. Up to 75% of the grant may be forgiven if the applicant, after 12 months following the grant, will have demonstrated that it continues the business and maintained average employment and that the enterprise suffered business losses because of COVID-19; the remainder will be repaid in 24 months.

Support for microenterprises – PLN 25 billion

The program provides for repayable grants to enterprises, that are to be used for continuing business activity and preservation of employment but not for acquisitions, with the amount of each grant not exceeding PLN 324,000 for one enterprise. The support will be granted for 36 months. Up to 75% of the grant may be forgiven if the applicant, after 12 months following the grant, will have demonstrated that it continues the business and maintained average employment; the remainder will be repaid in 24 months.

In each case the amount of support will depend on the number of employees and amount of losses suffered by each business.

There are certain conditions for applying for assistance. The aid is directed to enterprises which are not in liquidation, insolvency or restructuring, are Polish tax residents and have been paying certain taxes in Poland for 2 years preceding the program’s implementation and can demonstrate losses due to COVID-19 (as defined in applicable legislation passed on 2 March and 31 March 2020). Further, the conditions for participation of large businesses are more complex than for micro, small and medium enterprises.

The program must be approved by the European Commission as permissible State aid, and the Polish parliament must adopt implementing legislation. Thus, implementation could realistically begin in one month at the earliest.

© Copyright 2020 Squire Patton Boggs (US) LLP

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About this Author

Marcin S. Wnukowski, Squire Patton, Warsaw, foreign investment matters lawyer, acquisition transactions attorney
Partner

Marcin Wnukowski focuses his practice on foreign investment matters and merger and acquisition transactions in Poland in a broad range of industries including pharmaceuticals, automotive, financial services, hotel and hospitality, and real estate. His clients include private equity firms and multinational investors. State aid and competition law approvals are among his core practice areas. He also serves as de facto outside general counsel to various clients in different industries.

48-22-395-5503
Peter Swiecicki, Warsaw, Squire Patton Boggs, Infrastructure Financing Lawyer, Privatization Matters Attorney
Partner

Peter Swiecicki is the Managing Partner of our Warsaw office and his practice includes some of the largest infrastructure financings and privatizations in Central and Eastern Europe. His experience includes financings of the largest and most complex toll motorway project in Poland, as well as the main gas pipeline and the tallest office building in Central Europe.

Peter has served as an advisor to the Government of Kuwait on PPP projects, and advised on the financing of the Żywiec Hospital PPP project.

He has represented international companies in a wide variety of matters relating to cross-border investments including financings, acquisitions, divestitures, restructurings, governance and real estate matters.

As an adviser to Poland’s ministers of finance and foreign economic relations following the end of the communist era, Peter assisted in drafting foreign investment and banking reform legislation, negotiating with multilateral institutions and formulating privatization and structuring strategies for state banks, holding companies and foreign trade enterprises. Subsequently, he served on the supervisory board of one of Poland’s leading commercial banks.

48 22 395 55 08