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.