FINANCING NEW BUSINESSES IN THE CZECH REPUBLIC VIA EU GRANTS

Czech Republic - European Union

SHORT OVERVIEW: HOW TO FINANCE NEW BUSINESSES AND START-UP PROJECTS IN CZECH REPUBLIC VIA EU GRANTS

Since February 2006, The World Bank has officially classified Czech Republic as standard, fully developed free market economy. Its economy is one of the most stable in Europe (and even in the world). In spite of long-term remarkable condition of Czech economics entrepreneurs seeking to start new businesses, ventures or start-up projects there still face considerable challenges (administrative, financial and other). Main problem the most new businesses and start-up companies struggle with is difficulty with obtaining the financial resources to carry out their business plans.

i. sources for funding new business projects in czech republic

Are you seeking funding for a new project or business in the czech republic? you have a number of feasible options to choose from – from traditional to modern ways of financing start-ups:

·         obtaining financial resources from banking institutions,

·         obtaining financial resources from governmental supporting programs,

·         business angels, venture capitalists and seed capital funds,

·         using czech crowdfunding portals (such as startovac.cz, nakopni.me, hithit and many others),

·         obtaining financial resources from eu grants.

You need to consider which of these financial sources is most suitable for your business plan. this article will further focus on the possibilities provided from eu grants. however, mind that getting money from eu funds is nothing but easy – be ready for preparing a meticulous business plan, possessing an in-depth knowledge of your project, and expect long, challenging funding process.

ii. EU grants – how do they work?

The european union’s regional policy, also called economic and social cohesion policy (esc) or in short cohesion policy, is based on richer countries contributing to the development of poorer countries and regions to improve the quality of life of citizens of the entire european union. this approach should eventually lead to increase of living standard and wealth in all eu countries. the esc policy, alongside the agricultural policy, is one of the most important european agendas and the european union spends more than one third of its common budget on it.

ACCORDING TO EU REGULATIONS, THE EU COHESION POLICY`S MAIN GOALS ARE:

  • Promote harmonious and sustainable development of economic activities and a high level of employment. 
  • Promote faster development of less developed regions of EU.
  • Promote protection and improvement of the environment in the territory of the EU. 
  • Promote territorial interdependence and cohesion of the Union. In this context, cross-border, transnational and interregional cooperation also plays an important role. 

Needless to say, those projects or businesses which promote the aforementioned agendas will receive higher priorities for funding.

EU GRANTS ARE OFFERED THROUGH TWO MAIN CHANNELS:

· COMMUNITY PROGRAMMES AND
· STRUCTURAL FUNDS.

Community Programmes of European Union in Czech Republic

Community Programmes are financed directly from budget of EU. On the other hand programmes financed from EU structural funds does not receive money from EU budgets but from national budgets of particular EU member states. In both cases EU grants usually cover applicant`s expenses up to 40-75% (sometimes even more). 

Structure, content and goals of community programmes and structural funds change on regular basis depending on current course of EU politics. In budget period 2014-2020 EU supports small and medium enterprises in Czech Republic in following grant programs:

·         Research, development and innovations: Programme Horizon 2020

·         Environment: Programme LIFE

·         Business: Programme COSME

·         Culture: Programme Creative Europe

·         Health: Programme Health for Growth

III. Structural funds of European Union in Czech Republic

Main aim of structural funds is to reduce negative impacts of economical differences between regions of EU member states. Here are structural funds implementing in Czech Republic:

  • The European Regional Development Fund (ERDF)
  • The European Social Fund (ESF)
  • The European Union Solidarity Fund (EUSF)
  • The European Agricultural Guidance and Guarantee Fund (EAGGF – Guidance Section)
  • The Financial Instrument for Fisheries Guidance (FIFG)
  • The European Globalisation Adjustment Fund (EGF).

Currently Czech Republic is implementing following dotation programmes which use finances from above named structural funds of European Union:

·         National operation programmes (currently 10 programmes),

·         Programmes for cross-border cooperation (currently 5 programmes),

·         Programmes for international and interregional cooperation (currently 6 programmes).

Most of these programs use the “retrospective financing” principle. This, in other words, means that the enterprise or start-up company has to obtain the financial resources for the project in advance from other institutions (banking sector, governmental programs, business angels or risk capital funds). The actual costs and expenses will be then reimbursed by the appropriate structural fund at the end of the project realization.

National body responsible for drawing and distributing financial recourses from EU funds in Czech Republic is Ministry of Regional Development in Czech Republic.

IV. CURRENT NEWS: EU GRANTS IN PERIOD 2017 – 2020 IN CZECH REPUBLIC


ACCORDING TO INFORMATION FROM PORTAL INVESTICNIWEB.CZ CZECH REPUBLIC HAS SO FAR MANAGED TO CONTRACT 648 BILLION CZECH KORUNAS FROM EU FUNDS FOR PERIOD 2017-2020. IN NEXT COUPLE OF MONTHS ALSO CZECH START-UPS CAN LOOK FORWARD TO NEW FUNDING OPTIONS. INVESTMENTS TO CZECH START-UPS WILL BE SUPPORTED BY EUROPEAN INVESTMENT FUND (EIF) WHICH RELEASED FOR THIS PURPOSE 10 MILLION EUROS. ANOTHER 40 MILLION EUROS WILL COME FROM EU STRUCTURAL FUNDS (ALLOCATED TO BUDGET OF CZECH MINISTRY OF INDUSTRY AND TRADE). ACTIVITIES OF FINANCING CZECH START-UP SHOULD BE COORDINATED BY NEW CZECH NATIONAL INNOVATION FUND WHICH SHOULD BE ESTABLISHED IN 2017.


V. HOW CAN I SECURE AN EU STRUCTURAL SUBSIDY?

The procedures for obtaining a subsidy from European funds include ten basic steps:

  1. Creating a detailed project proposal
  2. Finding a relevant operational programme and within this program a specific area of intervention for your project proposal
  3. Application submission
  4. Application evaluation
  5. Project implementation
  6. Evaluation and accounting of applications
  7. Payment request
  8. On-site inspection of the project
  9. Project publicity
  10. Evaluating project sustainability

For a detailed description of each step please visit European structural and investment funds or contact our team of consultants.

Are you interested in starting new business in Czech Republic and obtaining financial resources for this purpose? Our team has broad experience with helping foreign investors establishing businesses in Czech Republic. We are here to help you. Contact us here.

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