On 7 December 2018, the Romanian Government approved an Emergency Ordinance for the support of setting up of new small and medium-sized enterprises (SMEs) proposed by the Ministry for Business Environment, Trade and Entrepreneurship.
The recitals of the Ordinance state that SMEs represent 99.8% of the enterprises’ population within the EU and 99.7% in Romania. Most of the SMEs are micro-enterprises, with a maximum of 10 employees (93% of the companies are in the non-financial markets). Romania is the last ranking country in the EU as regards SMEs, with only 2.2 SME’s/100 inhabitants, which is less than the EU average of 4.5 SME’s/100 inhabitants.
According to the public statements of the Prime Minister on the Start-up Nation scheme, the 2017 scheme was a huge success with 8,000 new business and over 20,000 new workplaces created. The Start-up Nation Scheme 2018 is a simplified form of the 2017 one, especially as regards young entrepreneurs, and also includes forms of advance funding. The scheme is supporting 10,000 projects and is especially targeting the areas in Romania where the number of SMEs is low.
The Start-up Nation scheme was implemented in order to benefit a maximum yearly number of 10,000 SMEs and for a maximum funded amount of RON 200,000 per beneficiary (EUR 44,000), representing 100% of the eligible expenses.
Submission of the business plan and of the application is made online.
It is important to note the following matters:
Beneficiaries: The beneficiaries of the Start Up Nation Scheme 2017-2020 for stimulating the set-up of SMEs, are companies set up after 30 January 2017 and which, at the date of filling in the application, fulfil the eligibility criteria as well as the criteria applicable for the de minis aid scheme for this programme (provided in a separate enactment of 2017, such as privately held SMEs having authorised relevant NACE code etc.), and are performing activity in the production, creative, services and trade industries. The proposed changes also remove the previous condition requiring the beneficiaries to fulfil the specific criteria for EU funding.
Advance Funding: Under the new enactment it is possible for the beneficiaries of the Start-up Nation scheme to request an advance of up to 30% of the overall eligible expenses. Also, it is permitted for beneficiaries to obtain a lump sum of the 2nd tranche, without it being necessary to submit justifying documents, for expenses related to salaries, rent, utilities and accountancy services, provided that at least 2 new workplaces for an indefinite period or permanently will be created.
New criteria for the evaluation of the business plan: There is a new criterion for evaluating the business plan submitted, namely the density of the SME. For localities (rural or urban) where the number of SMEs/100 inhabitants is less than 4, the applicant shall obtain 20 points. This is a high score, in comparison with 5 points, obtained for applicants of SMEs situated in localities (rural or urban) where the number of SMEs/100 inhabitants is higher than or equal to 4.
Another new criterion is that none of the shareholders of the applicant should have been a director or shareholder in a company declared insolvent or bankrupt in the previous 5 years (2013-2017).
Government Emergency Ordinance no. 108 was published in the Official Gazette of Romania no. 1060 as of 14 December 2018.
Should you have any questions or need further information in relation the above, please contact our Corporate Team: Managing Partner Silviu Stratulat at SStratulat@saa.ro; Partner Andrei Albulescu at AAlbulescu@saa.ro and Partner Ramona Iancu at RIancu@saa.ro. or call the office on +40 (21) 316 87 49.
This document provides a general summary only and is not, nor is it intended to be, comprehensive nor does it constitute legal advice. Specific legal advice should always be sought regarding the particular facts of a given situation.
