May 19, 2020
On 18 May 2020, the Government of the Czech Republic has approved the guarantee program COVID III aimed to help the entrepreneurs who are affected by the coronavirus outbreak. The Czech Government has approved allocation of CZK 150 billion, which means that according to press releases, Českomoravská záruční a rozvojová banka (which cooperates on this program with the Ministry of Industry and Trade) will be able to guarantee loans up to CZK 500 billion.
The guarantee program COVID III is intended for the entrepreneurs employing up to 500 employees. The guarantee will be provided up to 90 % of the principal of the loan for the entrepreneurs with less than 250 employees and up to 80 % of the principal of the loan for the entrepreneurs with more than 250 employees. The maximum amount of the loan principal shall not exceed CZK 50 million in general, however, the amount of the principal is also limited to 25% of the entrepreneur's total turnover for 2019 or double amount of the entrepreneur's annual wage costs (including social security costs as well as costs for employees who work for the establishment and are on the payroll of suppliers).
The period of the guarantee is maximum 3 years, provided that in case of performance under the guarantee, the obligation of the debtor does not expire and the debtor will have to pay the respective amount directly to Českomoravská záruční a rozvojová banka.
During the effectiveness of the loan agreement, legal entities will, inter alia, be obliged to give their consent with publication of their beneficial owner.
The difference from the previous COVID programs of Českomoravská záruční a rozvojová banka is that the call for the submission will be intended only for the commercial banks, i.e. the entrepreneurs will only negotiate with their bank. According to the information available on the website of the Českomoravská záruční a rozvojová banka, entrepreneurs can already start negotiations with their bank.