Anti-Crisis Shield to counteract COVID-19 pandemic – support for entrepreneurs

In order to mitigate the negative effects of the COVID-19 pandemic on entrepreneurs, the Polish government developed the so-called Anti-Crisis Shield (previously known as the “shield package”).

The legislation is still in the process of completion. Meanwhile, we want to present to you main assumptions underlying the provisions on support for the labour market, financing of enterprises, strengthening the financial system and public investments, which will soon to be reflected in the applicable laws. Tax issues were discussed by KPMG Tax specialists in a separate alert.

We are ready to provide you with detailed information concerning the prepared regulations and the possibility of practical application of certain solutions in your company.

Support of employment for companies facing financial difficulties

According to the draft Anti-Crisis Shield, ‘enterprises in financial difficulties’ are (i) companies, whose turnover has fallen by 15% over a period of 2 months and at least in one of these months a loss was shown, and (ii) companies, whose turnover in 1 month decreased by 25% as compared to the previous month and a loss was shown. Support for such companies may consist in:

  • Subsidizing by the State 40% of an employee’s remuneration in the case of entrepreneur’s financial difficulties. The said entrepreneurs will be able to limit the working time and the employee’s remuneration to 0.8 full time equivalents (the employee earns 80% of the current salary, but not less than the minimum wage) and the State, through the Guaranteed Employee Benefits Fund (“GEBF”), will cover half of the employee’s remuneration (the subsidy limit is 40% of the 2019 average salary in the national economy).
    This should cause a 60% reduction in the employer’s personal operating expenditure, which will consist of 20% resulting from reduction of the working time to 0.8 full-time equivalents and financing half of the reduced salary by the GEBF.
  • Co-financing by the State the idle time pay. In case of significant financial problems, companies will be able to take advantage of the economic downtime regime, where the basis of employee’s pay is limited to 0.5 full time equivalents and the salary is not lower than the minimum wage. The State (GEBF) will cover nearly half of the remuneration and social security contributions, i.e. 130% of the unemployment benefit. The assumed duration of additional payments from the GEBF is 3 months.

 

Financing of sole proprietorship in case of economic downtime

The sole proprietorship and persons employed under civil law contracts (services contracts, contracts for a specific task) may receive from the State (the Social Security Agency) a one-off guaranteed monthly benefit in the amount of about PLN 2,000 gross (which constitutes 80% of the minimum salary for 2020). The condition underlying the payment is that the business activity or employment under a civil law contract should have begun before 1 March 2020.

 

Market and business support

The anti-crisis shield also provides for other solutions to support entrepreneurs in their activities. These are, among others:

  • partial reinstatement of trade on Sundays;
  • shifting utility payments;
  • the possibility of obtaining capital from the Polish Development Fund and trade insurance from KUKE (Export Credit Insurance Corporation);
  • the possibility of using ARP leasing with installments deferred by 3 months for transport companies;
  • a possibility of obtaining a low-interest loan from the Labour Fund up to PLN 5,000 for 12 months by micro companies employing up to 9 persons;
  • postponement of the effective dates of the waste database, employee capital plans and the register of beneficial owners;
  • suspension of selected administrative and tax deadlines;
  • no penalties for delays in public tenders;
  • postponement of automatic extension of visas and work permits for Ukrainian employees;
  • exclusion of the waiting period at the border from the working time of truck drivers;
  • a second chance policy to help small and medium-sized enterprises undergoing restructuring.

In addition, a PLN 30 billion Public Investment Fund is to be established to stimulate through public investment various areas of the economy. Priority areas are: infrastructure, modernization of schools and hospitals, digitization, energy, biotechnology and pharmacy, environmental protection.

Liquidity assistance

As regards guarantee support and loan subsidies, the anti-crisis shield envisages that BGK Bank (Bank Gospodarstwa Krajowego) will guarantee up to 80% of the loan amount (currently BGK grants guarantees up to 60%), without any commission. The guarantee may be applied for by micro, small and medium-sized enterprises. The guarantee is granted upon their application submitted to the lender’s bank. The Ministry of Finance estimates that in 2020 BGK will issue de minimis guarantees in the amount of PLN 9.5 billion.

Support from the banks

The reduction of interest rates by the National Bank of Poland on 17 March 2020 should bring about, among others, a reduction of an average loan installment following the reduction of PLN loans and deposits.

The Polish Banks Association also declared support for clients in connection with the coronavirus pandemic, including:

  • simplification of deferring (suspending) the repayment of the capital-interest or capital installments for up to 3 months;
  • possibility of renewing financing for up to 6 months at the customer’s request to all entrepreneurs who were creditworthy at the end of 2019;
  • deferment of payments of leasing installments and repayments due from customers under factoring on principles analogous to credit deferrals;
  • desisting from collecting fees or commissions for accepting and processing the above-mentioned applications, maximum reduction of related formalities and quick processing.

How can we be of help?

For many years we have been providing specialist legal assistance to the largest domestic and foreign entrepreneurs. Our team follows the legislative work caused by the current pandemic situation in the country and abroad on an ongoing basis and offers support in adapting to the changing laws.

In the current situation we can support you in particular:

  • in the case of payment gridlocks, bans on business operation, inability to ensure continuity of work – in analysing the risks associated with the epidemic and developing preventive or corrective measures;
  • if necessary, to obtain the State aid in relation to a coronavirus epidemic – in initiating appropriate procedures before the competent state or local government authorities and representations before those authorities;
  • in the event of an idle time, increased absence of employees or their quarantine, decisions on remote working – by providing advice and introducing appropriate procedures (e.g. remote working regulations).

If you wish to be provided with a more detailed advice on the topic, please contact us.