COVID PRAHA – pandemic related financial instrument supporting Prague enterprises

By project FINERPOL

Published on 30 July 2022

Czech Republic

Praha

About this good practice

The COVID PRAHA Guarantee Program was financed from the Operational Program Prague the Growth Pole of the Czech Republic (OP PGP) and was intended for financing projects implemented in the capital city of Prague.
The support addressing issue of liquidity shortage of SMEs affected by pandemic lockdown in Prague, in the form of guarantee and interest rate subsidy, was provided for wage and energy costs, rent payments, payment of supplier-customer invoices, pre-financing of receivables, acquisition of assets, inventories, and other small assets.
The COVID PRAHA Guarantee Program was transformed from INFIN Program, the previous financial instrument program co-financed by ERDF from OP PGP, which was prepared also regarding experience of FINERPOL project. The transformation of FI was needed to address more urgent needs of Prague’s companies caused by lockdowns during COVID pandemic.
Product development from idea to the banking counter was done in a record 2 weeks-time, introducing very favourable conditions for SMEs with their financial situation at risk caused by lockdown. Framework cooperation with 20 commercial banks was already established by National Development Bank (NDB) before the program start. Thanks to the previous experience with INFIN programme, the transformation into a new financial instrument could be very fast.

Resources needed

The total financial allocation of the COVID PRAHA program was approximately EUR 23.8 million. Volume of guaranteed loans was EUR 62,7 million.

Evidence of success

Number of supported projects has been 311, total signed guarantee amount was 62,7 million euros. There was a huge demand from Prague’s companies to secure guarantees for their loans with commercial banks causing the call was oversubscribed within the first day. Framework cooperation with 20 commercial banks was already established by the INFIN programme, making it possible to set-up the new financial instrument in a record 2 weeks-time.

Potential for learning or transfer

Close cooperation of regional and national level is needed to bridge the pandemic situation, sharing experience how continuous coordination of involved parties (Ministry, Region/City, Development Bank, commercial banks) can bring fast reaction to emergency situations – ensuring better access to finance not only during pandemic, but also e.g., in regions affected by natural disaster or energy shortage etc. – currently a design of a framework fast reaction financial instrument for such situations based on the COVID PRAHA programme is being prepared by the Ministry of Industry.