Grants in the current crisis

The effect of the Covid-19 crisis has affected tens of thousands of companies and millions of employees worldwide. In Poland, almost six out of ten companies have been negatively affected by the coronavirus epidemic. Therefore it is not surprising that many company boards moving away from risk-taking activities and start to focuse on reducing all possible costs. However, in the near future, companies will have to return to a difficult post-Covid market and perhaps fight for the customer even more than before. How to survive the crisis and not to forget about constant development and maintaining competitiveness? In this area grants for R&D and the implementation of innovations into business activity may be helpful.

The pandemic outbreak did not stop the ongoing technology race. On the contrary, for many entrepreneurs, it became an impulse to undertake research and development works.

Probably for many entrepreneurs, the first and justified decision after the period of the economy closure, was to use the so-called Anti-Crisis Shield. The support offered under the government package is primarily aimed at securing the current needs related to employment protection, reduction of burdens and maintaining financial liquidity. According to the data of Ministry of Development, as of 8 July, the companies received support in the total amount of PLN 112 billion, from which the most popular were exemptions from the obligation to pay social security contributions and subsidies for the protection of workplaces provided by the Guaranteed Employee Benefits Fund.

Securing these needs is an obvious and necessary for every company. Nevertheless, companies must not forget about the need to remain competitive, even in such a difficult period as a pandemic. The appearance of Covid-19 did not change the fact that in the era of rapid technological development, the innovation measured by R&D projects and effective commercialization are the main aspects that determine the survival of an enterprise on the market.

Observing the situation on the subsidy market during the pandemic, one can observe a significant interest in support for R&D projects. For example, in the last call of the Fast Track (June 2020), which was aimed at supporting innovative activities of SME’s, 455 companies submitted applications. Such a great interest in that call, despite the uncertain situation for entrepreneurs, may result from the fact that: firstly, entrepreneurs had more time and resources to prepare an application and secondly, they realized that a non-refundable grant is now more than ever needed.

The main breaking factor may be the risk of failure but this has always been a part of the project

Not all entrepreneurs have the appropriate awareness and courage to continue or undertake innovative projects during that period. The risk which always accompanies R&D projects, is now even more noticeable.

Enterprises struggling with the difficulties resulting from the pandemic do not want to take further uncertain actions, which may become the failure to achieve the assumed project results and the lack of effective implementation of such results.

However it should be noted, that in projects of this kind, the state takes on the main risk of failure and thus encourages companies to create and develop new unproven technologies. This is why there are number of safeguards in the co-financing contract which, in justified cases, protect the beneficiary against the return of co-financing, e.g. in the case of failure to achieve the declared milestones or in case of market realities changes such as a pandemic.

Additionally, organisational changes in ongoing calls, which have significantly simplified the settlement of ongoing projects and provided a basis for announcing new applications, should be considered as kind of encouragement for entrepreneurs. The consent of the European Commission to make the rules of public aid more flexible and the efficient amendment of national law allowed the intermediary institutions (e.g. NCBiR, PARP) to carry out competitions on more accessible conditions for Applicants.

Competitions available under the new rules

Entrepreneurs who are able to take the risk of possible failure in order to raise the level of their innovativeness may take advantage of competitions available this year, e.g. from:

• Submeasure 1.1.1 Industrial research and development works conducted by enterprises of the so called „Fast Track” (2nd August – 14th September 2020) and the so-called „Coronaviruses Fast Track” (6th May – 31st December 2020)

It is a flagship competition in which entrepreneurs are able to finance R&D works aimed at developing a new type of product, service or technology. The grant allows i.a. to finance the salaries of the R&D staff, elements of the pilot line and cost of materials and raw materials necessary to conduct the research. The maximum level of co-financing in this competition is up to 80% of eligible costs. As part of the implemented improvements, the institution allowed introduction of the remote expert panels, extended the maximum project implementation period until December 2023, and additionally announced a thematic competition under the Fast Track, dedicated to the fight against coronavirus.

• Submeasure 3.2.2. Credit for technological innovations (1st June – 30th December 2020)

The Technological Credit is dedicated to entrepreneurs who have the risk related to the implementation of R&D works already behind them, or have not incurred it at all, since they have decided to purchase the IP rights of R&D works to implement technological innovation on the market. Under the submeasure, entrepreneurs may finance the purchases, such as fixed assets, real estate, construction works and materials. The key changes in the competition are the abolition of the PLN 6 million amount limit of co-financing and allowing the companies that plan to introduce innovations only at the level of their own enterprise to take part in the competition.

Author:
Łukasz Pupek, Managing Partner, SAS Advisors

Last Updated on October 30, 2020 by Łukasz