In relation to the finalisation of the notification procedure for the European Commission, the process
of accepting applications for subventions under the governmental scheme – Financial Shield of the
Polski Fundusz Rozwoju S.A. (Polish Development Fund – PFR), has already been launched for
Large entrepreneurs. The Financial Shield is another form of financial support addressed towards
entrepreneurs in order to combat the negative economic effects of the COVID-19 epidemic. The
financial shield for large entrepreneurs provides capital, preferential and liquidity financing. Depending
on the form, the financing can be provided in a returnable or partially non-returnable form. The
intention is to correlate, to the possible extent, the financing provided under the terms of the
programme with the actual damage suffered by the entrepreneurs in connection with COVID-19 as
well as to promote employment. It is also worth noting, that entrepreneurs may use more than one
financing instrument within the Financial Shield.
Below is a brief summary of the main conditions of this scheme.
1. Entrepreneurs entitled to aid
- Large entrepreneurs (employing at least 250 employees as at December 31, 2019 or whose
annual turnover exceeds EUR 50 million and balance sheet total exceeds EUR 43 million). - Small and medium-sized entrepreneurs (SMEs) (employing over 150 employees as at
December 31, 2019, whose annual turnover exceeds PLN 100.000.000, provided that (i) all of
the following conditions have been met: (a) the entrepreneur’s financing gap in accordance
with the financial projections exceeds the amount of PLN 3,500,000 and (b) it has already
exhausted the maximum possibilities of obtaining financing from the Programme for small and
medium-sized entrepreneurs, or (ii) the financing relates to the Sectoral Programme in
connection with COVID-19).
Should there be affiliations on part of the entrepreneur through the relations with other entities (e.g.
within capital groups), it may be necessary to include the data of those affiliated entities in the number
of employees, the annual turnover and balance sheet total.
2. Type and amount of financial aid
The Financial Shield for Large Companies is composed of the Liquidity Shield, Financial Shield and
Capital Shield. Funding under the Programme may be granted in the following forms:
- Liquidity financing:
- takes the form of a liquidity loan;
- is intended to provide entrepreneurs with working capital, in particular for the purpose of
settling trade liabilities, salaries, public-law liabilities and other purposes related to the
financing of current operations established in the loan agreement; - is granted up to a maximum amount of PLN 1 billion;
- repayment of the loan must be made within 4 years from the date of signing the loan
agreement; - the interest rate on the liquidity loan is 1% in the case of SMEs in the first year from the
date of signing the loan agreement, 1.25% in the second and third year and 1.75% in the
fourth year, and in the case of large entrepreneurs 1.25% in the first year from the date of
signing the loan agreement, 1.75% in the second and third year and 2.75% in the fourth
year. No commissions or fees are charged on the loan agreement.
- Preferential financing:
- is intended to partially cover the actual damage suffered by a large entrepreneur as a
result of COVID-19; - is granted in the form of a redeemable loan up to a maximum of 75% of its value or 75%
of the actual damage suffered as a result of COVID-19; - the loan is granted in an amount no higher than the estimated damage due to COVID-19
(up to a maximum of PLN 750 million); - actual damage due to COVID-19 will be calculated for a period no longer than between 1
March 2020 and 31 August 2020, ex post on the basis of actual financial data; - the maximum repayment period of the preferential loan is 4 years from the date of signing
the loan agreement; - the interest rate of the preferential loan is 1% in the case of SMEs in the first year
following the date of signing of the loan agreement, 1.25% in the second and third year
and 1.75% in the fourth year and in the case of large entrepreneurs 1.25% in the first year
following the date of signing of the loan agreement, 1.75% in the second and third year
and 2.75% in the fourth year. No commissions or fees are charged on the loan
agreement.
- is intended to partially cover the actual damage suffered by a large entrepreneur as a
- Capital financing:
- is intended to enable an entrepreneur to restore a stable financing structure, which has
been disturbed, in particular by the need to reduce or stop production or provision of
services and by the demand fluctuations resulting from COVID-19, through capital
injections; - may be provided, in particular through the following capital instruments: (i) shares or
stocks; (ii) subscription warrants; (iii) bonds or loans convertible into stock, subscribed or
purchased by the PFR on market terms or under a State aid regime.
- is intended to enable an entrepreneur to restore a stable financing structure, which has
3. Conditions for the aid being granted
The entrepreneur needs to meet one of the following conditions:
- has recorded a decrease in economic turnover (sales revenues) of at least 25% in any month
after February 1, 2020 compared to the previous month or the same month last year, due to
the economic disruption caused by COVID-19. - lost the ability to manufacture or provide services or to receive products or services by the
purchasers due to lack of availability of components or resources in connection with COVID-
19; - does not receive payments for sales due to COVID-19 that exceed 25% of the receivables;
- due to financial market disruption, has no access to the capital market or credit limits in
respect of new contracts; - is a participant in the Sector Programmes in connection with COVID-19.
4. Additional criteria
The entrepreneur must also meet the following conditions:
- The entrepreneur conducted business activity as at December 31, 2019.
- The entrepreneur (i) has a tax residence within the EEA, (ii) is registered in Poland (in the
National Court Register KRS or Central Register of Business Activity and Information CEIDG)
and (iii) its majority ultimate beneficial owner does not have a tax residence in the so-called
tax havens. - The entrepreneur was not in arrears in payment of tax liabilities and social security
contributions as at December 31, 2019. - The entrepreneur is not subject to liquidation proceedings, bankruptcy proceedings or
restructuring proceedings. - The entrepreneur does not conduct business activity carried out by financial institutions and
rating agencies, development or commercial real estate activities, nor in an area that is
questionable for ethical and moral reasons, or that may result in the restriction or violation of
individual freedoms and/or human rights. - The entrepreneur will successfully undergo a due diligence process, including, in particular,
the KYC “Shield” procedure, or a confirmatory due diligence conducted by PFR (or its
advisors) or in the form of so-called vendors due diligence.
Depending on the type of financing which the entrepreneur applies for, additional criteria may apply,
meeting of which shall be necessary in order to be granted the financing.
5. Application process
- Financing is granted on the basis of an application for support submitted electronically via the
application form available on the PFR website. - The procedure for examining applications does not provide for the possibility of appealing
against the decision of the PFR to grant or refuse funding in this respect with regard to the
proposed conditions for granting it. - Before granting financing, PFR performs the process of verification of an entrepreneur in the
form of a simplified due diligence. The due diligence may cover, depending on the specifics of
a given case: (i) legal, (ii) financial, (iii) market, (iv) operational and (v) as appropriate, other
issues, e.g. tax, regulatory or commercial. As part of the due diligence process, the PFR also
verifies the information on the ultimate beneficial owner of the entrepreneur and the risks
associated with the entrepreneur. - The PFR has the right to propose to the entrepreneur to provide financing on the basis of a
financial shield instrument other than the one indicated by the entrepreneur in the application
and in an amount other than that declared by the entrepreneur. The decision of PFR to grant
or refuse financing is based on the principle of reasonable discretion. - The amount of financing and the conditions for its granting are specified in an agreement
concluded between the beneficiary and the PFR. The agreement may specify additional
restrictions and obligations. - The resources allocated to financing under the Financial Shield for Large Entrepreneurs are
limited. If there are more applicants than funds, granting of subventions shall generally follow
the order in which the PFR will process applications.
FOR MORE INFORMATION PLEASE CONTACT:
Emilia May
Attorney at Law
T: +48 587 820 050
E: may@millercanfield.com
Andrzej Czopski
Attorney at Law, Partner
T: +48 587 820 050
E: czopski@millercanfield.com
Disclaimer: This publication has been prepared for clients and professional associates of Miller Canfield, and is based on the
facts and guidance available at the time of its release which may be subject to change. The purpose of the publication is to
draw attention to the legal events indicated in it and should not be the sole basis for any decision regarding a particular course
of action; nor should it be relied on as legal advice or regarded as a substitute for detailed advice in individual cases. The
services of a competent professional adviser should be obtained in each instance so that the applicability of the relevant
legislation or other legal development to the particular facts can be verified.