• Main
  • Advices
  • How to receive a loan for the development of small and medium business in Czech Republic?

Advices

ADVICE #48

How to receive a loan for the development of small and medium business in Czech Republic?

Global experience has shown that successful business development is possible only if there is a deliberate and consistent policy of the state aimed at creating favorable conditions for businesses, especially for small and medium enterprises (SME).

The SME sector is the main source of new job creation in the modern economy. In industrialized countries, accounting for 50-60% of all employment, and up to 70-80% of new jobs. In this regard, supporting the development of small and medium business is undoubtedly important.

The European Bank for Reconstruction and Development (EBRD) made considerable investments, investing in the development of SMEs in countries in transition. Without such financial support to the business, it is almost impossible to get a Bank loan, because the analysis of the creditworthiness of the customer does not always reflect its actual financial condition. Most European banks require for loan official records of the business, in which, as a rule, customers indicate the minimum income for the tax deductions were less. In this regard, banks often deny credit to entrepreneurs.

However, in contrast to the usual European financial institutions, EBRD programs have simplified financial analysis of the client's activities, compiled by the primary documents, which reflect the actual cash flows of the firm.

The EBRD program is designed to stimulate the development of SMEs in each country with which the Bank cooperates. To date, the only country that has not received more investment assistance from the EBRD, is the Czech Republic.

An active role of the EBRD in the Czech market began to support the efforts of the Czech authorities for stabilization and development of the banking system after the crisis in 1997. The EBRD actively participated in the privatization of  two largest banks in the country: Ceska sporiteľňa and ČSOB. The Bank provided capital for privatization Ceska Sporitelna, which was then privatized by another Bank - Erste Bank. In 2002, the Bank has also actively participated in the privatization of ČSOB.

In 2007, the Czech Republic became the first European country that has ceased to receive investment assistance from the EBRD. Today the Czech Republic is a member of the EBRD with a share capital of 0.85% and with its own representative on the Board of Directors of the European Bank.

It should be noted, however, that now in the Czech Republic small and medium business is not quite difficult to obtain the credit for development. Among Czech banks, Komercni Banka is one of the leading in the country that has the most experience in lending companies. In 2004, the Bank received a credit line from EBRD in the amount of 20 million euros to support the development of SMEs.

Komercni Banka offers a special loan product for companies: Profi Loan FIX.

The conditions for receiving the credit in Bank the following:

1. Identification document (ID card, passport, entitling them to stay in the country);

2. Age from 18 to 60 years;

3. Period of activity of the business for at least 12 months. Company/sole proprietor must be registered in the country;

4. The documents giving the right to conduct business;

5. Certificate from the social department on absence of debts;

6. Tax return for the last reporting period, the report of the audit (for companies);

7. Balance sheet, statement of profit and loss;

8. The Bank statement for the last 3 months.

We do not forget that this is an initial package of documents for applying for a loan. In the process of reviewing, the Bank has the right to request additional information.

In the presence of all required documents and approval by the loan officer, the Bank is ready to transfer the funds to the borrower in the amount of up to 3 million CZK, but subject to the provision of collateral: guarantee, immovable or movable property. However, if the client makes a loan not exceeding 2 million krona, collateral is not required.

The main feature of Bank lending to SMEs in the Czech Republic is specifying the target destination of the funds, which can be verified on the basis of available official documents (after receiving the loan from the Bank – note). For example, the borrower provides the accounting records, or if it was an investment loan, then the other documents that confirm that the investments were made with borrowed funds.

It is worth noting that after the procedure of consideration of documents for the Bank are also important social portrait of the client. Responsibility, possession of full information about the business, the degree of willingness to repay the loan, a clear vision of business development, the speed of delivery of the documentation requested by the Bank, the openness and transparency of business.

In the Czech Republic there are also own unspoken requirements for the loan, which should not be forgotten. For example, the value is the number of partners in the business, since the more people, the more opinions and disputes; who is a Director (priority is given to the leaders of Czech nationality); the type of activity (check stability).

The biggest drawback for the loan may become the status of a residence permit (residence permit) in the country, as very often ask exactly a card of permanent residence. Of course, the Bank will also accept application for the loan with a residence permit, but the risk of failure is high. All depends on which branch you go. If one refused, you have the chance to go to another where they will be more loyal to a leader who believes in you and in your business.

Most important, before you apply for a loan is to calculate the forces and possibilities, because you will have to answer for its obligations.

The European Bank for Reconstruction and Development (EBRD) is an investment financial institution founded in 1991 to facilitate the transition States of Central and Eastern Europe and Central Asia, to a market economy.

At present, the EBRD includes 64 countries, the European Union, and the European investment Bank (EIB). The Bank is active in more than 30 countries - from Central Europe to Central Asia, and in southern and Eastern Mediterranean.

The Bank provides loans for the development of SMEs, invests in the equity of companies, and issues guarantees for projects in the private and public sectors, in areas such as: Finance, infrastructure, industry and Commerce.

Suita Isaeva, Banks.eu

Чехия

Comments

Share your advices

Have your own method for choosing a bank? Know the best way to open a bank account, get a loan, establish a company or make money-transfer to another country? Share your expertise with other users!

Advice #264
How to open an account in Norway?
Норвегия
Advice #252
How to open an account in Greece?
Греция
Advice #200
How to open an account in Hungary?
Венгрия
All advices
Zlata Erlah

Immigrant Invest general manager in Austria

Austria 
Polina Filatova

LondonfoRus general manager

United Kingdom 
Sergey Tabarcha

Bancamea.md founder

Romania 
All experts

Virtual Affairs: the bank of the future has no borders - it's where its clients are

Read now