Romanian Govt Approves Micro-Business Start-Up Aid Act

Young entrepreneurs will receive up to 50% of the value of their planned business, but no more than EUR10,000, plus counseling and support, from the Agency for the Implementation of Projects and Programs for Small and Medium Enterprises (AIPPIMM). The business will be exempt from paying social security contributions for the income gained by four employees hired for an indefinite period, as well as from the fees charged by national or local Trade Registry Offices.

To get bank loans for export production and investments in the expansion and development of the new businesses, the state will grant guarantees for up to 80% of the loan value, but no more than EUR80,000, via the National Loan Guarantee Fund for Small- and Medium-Sized Enterprises. Incentives, however, will no longer be granted if a company's turnover for the current year exceeds the equivalent in lei of EUR500,000, or when the company turns three years old.

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.

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