PROGRESS 2007 – unofficial summary of programme main terms and conditions applicable from 2 July 2007.

Note:

The text below is an extract intended to give basic information only.For more details kindly see the text of the official Call for submission of applications under this programme published by the Ministry of Industry and Tradeand available from its website ().The full Czech version canalso befound through CMZRB’s web site (see /Podpora malého a středního podnikání/Programy OPPI/Progress).

PRO G R E S S

Programme in Support of

Developing Small and Medium-Sized Enterprises

Programme legal framework:

  • national Act No.47/2002 Coll. on SME supportand relevant EU regulations,as amended

Programme administrator (Managing Authority):

  • Ministry of Industry and Trade

Support provider:

  • Českomoravská záruční arozvojová banka, a.s.

(Czech-Moravian Guarantee and Development Bank, hereinafter “CMZRB”)

Source of finance:

  • loan fund purposely generated from resources allocated bythe state budget, European Regional Development Fund and CMZRB

Programme objective(> What is the programme good for)

The objective of this programme is to

a)enable the realization of business development projects of small and medium-sized enterpriseswhich may have difficulty in finding external financefor further development due to their lower capital capacity or lack of collateral for securing a standard commercial loan,

b)motivate the entrepreneurs to increase employment in the SME sector.

Type of support (> Whichassistance is available)

To achieve the above-mentioned programme objectives, the following forms of support are available:

a)subordinated loan,

b)subordinated loan with financial subsidy.

Aid beneficiaries(> Who can ask forsupport)

  • The programme is intended for small and medium-sized entrepreneurs withfewer than 250 employees, both legal and natural persons.
  • To be eligible for support under this programme, the applicant has to:

-fully comply with the SME definition according to the EC Regulation No. 70/2001 of 12 January 2001, as amended by OJ/L 124 of 20 May 2003,

-provide a set of valid documents evidencing his/her conformity with all generally binding legal and formal requirements applicable in the Czech Republic, such as authorization to run the relevant business, tax-payer registration according to the Czech Act on Tax Administration (No. 337/1992 Col., § 33, par. 1), proper settlement of all obligations towards financial, social and other authorities andhis/her employees, as well as compliance with the specific programme criteria.

  • No aid can be provided to businesses under bankruptcy proceeding or in a similar come-down situation (liquidation, property distraint, etc.).

Eligible projects (>Whena loan can be asked for)

Providing a subordinated loan (with or without financial subsidy) under this programme can be considered supposing that all the determined conditions are met, being the main of them:

Basicterms and criteria

  • The project to be financed shall belocated on the territory of the Czech Republic, except theregion of the Capital city of Prague.
  • Project key activity must comply with the list of supported industries as specified under the Sector Classification of Economic Activities (OKEČ – part A1)); however, projects including activities classified under categories 15, 17 and 24 may be eligible only if production or processing of agricultural productsare avoided(OKEČ – part B2)).
  • State aid intensity criteria shall be respectedpursuant to the project location (the limits are mentioned in the full wording of the respective call for applications submission).
  • Subordinated loan under this programme can be obtained as secondary finance resource only if another loan or leasing agreement has been concluded to simultaneously finance the eligible project. The primary source of finance has to be provided by a bank or legal entity authorized to give loans and committed to keep co-operation agreement concluded with CMZRB. The primary finance total sum cannot be lower than the subordinated loan amount.
  • Construction works can start and contracts with providers of equipment and technologies, incl. agreements on future contracts, may be concluded only after the date of notification issued by the support provider in order to confirm project eligibility.

Further terms

  • Subordinated loans shallalways be secured by a promissory note issued by the aid beneficiary and co-accepted by at least one physical person,or, legal entity´s partners, according to beneficiary´s legal status. More collateral may be required in case of higher risk assessment.
  • Keeping a separate accountancy and tax registers, as well as storing all documents evidencing the loan use and repaymentare required during the whole period of loan agreement duration.
  • Aid beneficiaries shall provide information on the realization of supported projects as stated in the loan agreement. They also have to respect applicable rules regarding the supervision and monitoring that may be performed by appointed officers of theMinistry of Industry and Trade, CMZRB’s employees and other specialists authorizedby these two institutions with the aim to check project implementation and finance situation both on project site and in the aid beneficiary’s office.
  • In order to monitor state aid and EU funds implementation, the support provider is obliged to provide managing authority and relevant EU institutions with information on programme support utilization.The aid beneficiaries shall supply necessary data and agree that the information provided and published with regard to projects supported under this programme may include all the details on loans granted as well as beneficiaries´ personal data.

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1), 2) – see the Joint annex to the OPEI programmes (OKEČ – part A, B) available on CMZRB website

  • Aid beneficiaries shall respect the following conditions regarding the ownership of tangible fixed assets that have been fully or partially purchased with the subordinated loan moneys:

-use them primarily to ensure the performance of supported project activities, not to remove them out of the territory of the Czech Republic or into the region of the Capital city of Prague,

-keep them in his/her propertyall the time since their acquisition and not lessthan 3 years after the date of project finalization, except the possibility when the revenue from earlier sell would be used for acquisition of new assets in order to continue the supported activity.

  • Aid beneficiaries are responsible for providing only correct and true data in any case related to the application for support and further reporting on project implementation course. Violation of this principle or not providing due documents or information may be considered failure in meeting programme conditions with consequentsanctions and penalties that may be applied.
  • Eligible project costscompensated under this programme cannot take advantage of other type ofaid provided with respect to the articles No. 87 and 88 of the EC Treaty (EC Regulation No. 70/2001)or under de minimis rule (EC Regulation No. 1998/2006).
  • Subordinated loan within this programme cannot be granted to support projects using a guarantee provided within the GUARANTEE programme, or assistedwithin otheroperational programme scheme.

Support characteristics (> What can be obtained)

a) Subordinated loan

  • Characteristics: subordinated loan means to be the last one in the succession of other financial commitments to be repaid by the entrepreneur. Grace period that can be granted to postpone the first repayment of this loan helps the aid beneficiaries to reinforce their capital base forthe agreed time.
  • Loan amounts:up to CZK 25 million.
  • Interest rate: 3 % p. a., fixed.
  • Maturity: up to 11 years.
  • Grace period: up to 6 years.

b) Subordinated loan with financial subsidy

  • Characteristics, loan amounts, interest rate and maturity: identical to the above described subordinated loan.
  • Additional assistance:

-Financial subsidy can be obtained if the number of SME employees has increased at least by 3 people, comparing the situation as of the actual date to the end of precedent year (more details in the full wording of the programme conditions).

-The subsidy shall amount to 10 % of the actually disbursed amount of subordinated loan, but may not exceed the outstanding loan principal sum registered as of the date when the increase of employees’ number was reported.

-The subsidy shall be providedin form of amortization of the last loan principal instalments equalling to thecorresponding subsidy amount.

Eligible cost(> What can be paid by means of the loan)

Subordinated loan resources obtained under this programme can be usedprincipally to pay the following expenses:

  • purchase and/or reconstruction of tangible fixed assets, or, fixed assets and lands (depending on the type of accounting kept by the loan beneficiary),
  • acquisition of intangiblefixed assets (e.g. patents, licenses, know-how),
  • purchase of a company put on sale within the bankruptcy proceeding,
  • VAT, which is a part of the respective eligible cost.

All the eligible costs financed from a loan provided under this programme have to be:

  • directly linked to the programme objective and supported projectrealization,
  • certified by invoices or other acceptable accounting documents issued laterthan 18 January 2007 and later than the date of the support provider’s notification on project eligibility,
  • paid only after the loan agreement has been concluded.

Application submission(>How to proceed)

  • Application forms corresponding to individual types of support are available from the Czech version of the web site ( /Formuláře), together with instructions on how to fill them.
  • For a set of documents required to be enclosed to the application submitted for approval kindly see the full wording of the programme conditions.
  • The filled in forms,containing all the data required as well as the complete set of enclosures pursuant to the type of support applied for, shall be delivered to any CMZRB branch (see the addresses on / Contacts).

Support granting

  • Based on individual applications received, CMZRB shall assess projects eligibility, viability and credibility and decide on providing a subordinated loan.
  • Subordinated loans granted within this programme will be disbursed based on acontract (loan agreement) signed between CMZRB and the individual beneficiaries; the agreement shallinclude all the terms related to the subordinated loan granting, repayment and other specific conditions (project publicity, e.g.).
  • There’s no legal right to enforce granting a loan under this Programme.

Programme Duration

The programme has been launched for the period 2007 – 2013; the first call for applications submissionhas been opened for the period from 2 July 2007 till 31 December 2008.

However, the volume of funds available may limit the extent of the programme being its actual duration on decision of the Ministry of Industry and Trade.

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©This is an auxiliary document of CMZRB which reserves the right to modify the text at its discretion with respect todecisions of relevant authorities. In case of any doubt the official wording of the relevant Call for applications sumbission published by the Ministry of Industry and Trade shall apply.