Gov't adopts Emergency Ordinance on support to young entrepreneurs
Romanians younger than 35 will be eligible for up to EUR10,000 as non-refundable financing to start their own micro-company, as long as they hire at least two employees and reinvest 50% of their profit every year, as per an emergency ordinance approved by the Government on Wednesday. The government adopted this Emergency Ordinance for boosting the establishment and development of micro-enterprises owned by young entrepreneurs, as well as the Government Resolution on the implementation of the said normative act; the new regulation is expected to support 1,100 new companies established by young people in 2011.
'In particular, the Ordinance comes in support of an extremely dynamic and active category, but that unfortunately faces problems in finding a job. One in five young people experiences such problems,' said Prime Minister Boc.
Thus, the Agency for Small and Medium Enterprises (SMEs) will grant for this type of start-ups set up by youth aged up to 35 non-repayable financial allocations of up to 50 pct of the project investment, yet no more than 10,000 euros. The support will not be granted in cash, but will be transferred into an account from where eligible expenses, such as equipment procurement, can be paid.
According to the same normative, the respective companies will be able to engage bank loans with state guarantees of up to 80 pct of the loan, but not less than 80,000 euros via the National Loan Guarantee Fund for Small- and Medium-Sized Enterprises. At the same time, social contributions owed by companies are granted a tax break for four employees collecting the average salary per economy.
This program was put forward last year by the Democratic Union of Hungarians in Romania (UDMR), as part of an economic recovery package, which also included improving financing conditions for SMEs by creating a credit card system. People close to the matter say such cards will be introduced shortly.The Government has already earmarked EUR5 million; a further EUR5 million will be allotted in the second half of the year.
In October 2010, Prime Minister Emil Boc announced the state would guarantee loans for young entrepreneurs up to EUR100 million, of which EUR20 million in 2010, and provide EUR10,000 as state aid to 200 companies in 2010 and at least 1000 in 2011.