Govt OKs Kc150bn guarantee for SMEs' loans worth Kc600bn

The Czech government approved a guarantee of Kc150bn for small and medium-sized enterprises (SME) that is expected to generate loans worth Kc600bn, Industry Minister Karel Havlicek said. The bill is to be debated by the Chamber of Deputies on Tuesday.

It is the biggest amount of guarantee for SMEs in the Czech and Czechoslovak history, Havlicek said.

The guarantee will apply to firms with fewer than 500 employees as well sole traders, he said. Businesses with fewer than 250 employees should be receive guarantees for up to 90 percent of loans. Large businesses would be offered 80 percent, Finance Minister Alena Schillerova said at a press conference after the cabinet meeting.

The programme will be prepared for operating loans of up to Kc50m. It will be a portfolio guarantee that will be distributed by state-run guarantee and development bank CMZRB. "The state will guarantee up to 25 percent (of a loan)," Schillerova said. Representatives of entrepreneurs said they welcomed the guarantee but want the programmes to be simple and accessible.

"Firms need liquidity, so it is good that the government has eventually come up with a bigger amount for their support," Confederation of Industry vice-president Radek Spicar told CTK. Because of fears of the current situation, a lot of companies have not been provided even by guaranteed loans under the subsidy programme COVID II, he added. The important thing is to provide entrepreneurs with aid fast, Chamber of Commerce spokesman Miroslav Diro said.

Guarantee and development bank CMZRB is settling around 100 applications for subsidies under the COVID I programmee per week, which is too slow, he sadi. In a month, fewer than a half of applications were settled, he noted. If Kc5bn were allocated for COVID I, these statistics indicate that the allocation will not be used fully, Diro said. The main problem is the unnecessary bureaucracy in the process, the added.

The government today also approved a measure that will enable builders to get compensations for current complications in transport infrastructure construction faster, the Transport Ministry said without disclosing the amount that will be provided for the compensations. The compensation tools have been prepared after consultations with construction companies and investor organisations so that construction of key transport projects can continue, Havlicek said.

Construction is now a key sector that can help maintain the economy. It comprises 360,000 employees and 200,000 firms and sole traders, Havlicek noted. The government will therefore increase the amount of public investments in construction, he added. The Transport Ministry earlier decided to raise the State Transport Infrastructure Fund's budget by Kc6.5bn to Kc113bn due to the current crisis.

The government today also approved the appointment of entrepreneur Simona Kijonkova, founder of logistics company Zasilkovna, as a member of the government's National Economic Council (NERV). The operations of NERV were renewed on April 9. The council now has 17 members, who are economists and representatives of large firms.

The council's role will be to identify deficiencies in the economy's functioning and provide recommendations in preparing strategic government documents relating to the economy. The council should also assess the measures adopted against the spread of the novel coronavirus and propose measures relating to the preparation of the 2021 state budget.