IMM Invest Romania

Tue | 09.06.2020

Legal

The GEO no 89/2020 published in the Official Gazette no. 458 of May 29, 2020 comes with a new legislative framework aimed at simplifying and easing access to financing for SMEs under the program IMM Invest Romania.

The normative act adopted by the Government, on the one hand, broadens the range of eligible beneficiaries for the program aimed at granting State guarantees for loans signed up by the beneficiaries with loan facilities and on the other hand, modifies and amends State aids scheme aimed at supporting the activity of SMEs in the context of the economic crisis caused by the Covid-19 pandemic.

Beneficiaries of the program IMM INVEST Romania

In the light of the new legislative provisions, the beneficiaries of the program are SMEs pursuing an economic activity (production, trade or services), namely companies existing and operating under the Law on companies no. 31/1990, cooperative societies, self-employed natural persons, owners of family owned companies or individual undertakings, but also – and this is news – non-governmental organizations, associations and foundations or, under certain conditions, agricultural cooperatives and agricultural cooperative societies pursuing economic activities.

For the record, the program allows the beneficiaries to access investment loans and / or working capital loans / credit lines State guaranteed via FNGCIMM (Guarantee National Fund for SMEs).

The maximum guaranteed ceiling amounts to 15 billion Lei.

Depending on the type of beneficiary (SME or microenterprise) and the type of loan signed up for (investment loan and / or working capital), the State can guarantee 80% or 90% of the amount of the loan, with no interest, guarantee fees or other fees for the beneficiaries. All fees in relation with the funding are 100% subsidized by the State budget until December 31, 2020, with a possibility for extension.

The maximum value of the loans to be signed up for can go up to 10 million Lei for investment loans and up to 5 million Lei for working capital, depending on the beneficiary of the credit (SME or microenterprise).

Conditions for access to IMM Invest Romania

The potential beneficiary must satisfy a series of cumulative eligibility conditions, amongst which we note:

Not to be in distress in the meaning of the points 20 and 24 of the Communication from The Commission - Guidelines on State aid for rescuing and restructuring non-financial undertakings in difficulty (2014/C 249/01), which means, for example, (i) for LTD or JSC – having not lost more than half of their share capital during the past 2 years and more than 1/4 during the past 12 months; (ii) for companies whose the shareholders, at least a part thereof, are bound by unlimited liability with respect to the debts of the company, having not lost more than half of their share capital during the past 2 years and more than 1/4 during the past 12 months; this rule does not apply to startups (that have not filed financial statements). As compared to the former regulation, the condition with respect to the company’s being impaired by the Covid-19 pandemic has been excluded!
Not to be under insolvency;
To provide collaterals to the credit facilities;

Guarantees provided by the beneficiaries

Before being modified, the GEO no. 110/2017 stated that for the two types of loans available, the beneficiary had to provide the following guarantees, which have been excluded by the GEO no. 89/2020:

Immovable mortgage and / or movable to be provided by the beneficiaries and / or by the third party guarantors;
The legal movable mortgage on the universality of the movable or immovable assets, existing or future, intended for the activity of the beneficiary, including business capital and stocks;
Legal mortgage on the credit balance of all accounts opened by the beneficiary of the program with the loan or funding institution.
Therefore, the beneficiaries shall no longer have all the assets mortgaged in order to guarantee the loans, but shall only be subject to providing the following guarantees:
For investment loans, the legal immovable and or / movable mortgage on the assets funded by such loan;
For the loans / credit lines for working capital, the legal mortgage on the credit balance of all accounts opened by the beneficiary of the program with the credit or funding institution.

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