WHAT IS THE «LIFE CYCLE» OF A PROGRAMME?
The «life cycle» of a programme begins with its pre-publication and ends with the completion of the investments.
More specifically, the main steps are:
Pre-publication, where the key points of the programme are set out
Call for proposals, where the procedures for submission, assessment and implementation of the investments are set out in detail
Submission of proposals, which is usually carried out within a maximum period of 2-3 months after the call for proposals
Assessment of proposals, which is usually completed 4-6 months after the deadline for submission
Implementation of the investments, within a period of 12 – 24 months from the completion of the assessment of the proposals
APPLICATION PROCEDURE
The application procedure is divided into three main stages:
- 1rd Stage: Preparation and submission of the proposal
- 2rd Stage: Evaluation
- 3rd Stage: Implementation
At the 1rd Stage:
The supporting documents are collected in accordance with the programme guide (by way of example, articles of association, balance sheets, tax returns, operating licences, certificates of studies and professional experience etc)
Offers or pro forma invoices for the investment expenses are collected
The business plan is prepared, in which the following are described: the company’s history, its operating method, the description of the investment, the justification for its implementation, forecasts of financial results etc)
The proposal must be submitted electronically via the ependyseis.gr online portal, while the physical file is submitted to the intermediary managing body.
At the 2rd Stage:
The submitted proposals are assessed according to the evaluation criteria of each programme.
The assessment is carried out on the basis of a score arising from the individual criteria. Usually the maximum score is 100 and the pass mark is 50. If the proposal receives a score below 50, it is classified as NOT ELIGIBLE
If the proposal receives a score from 50 to 100, then it is classified as ELIGIBLE. There may be cases where the budget of the ELIGIBLE proposals is greater than the programme budget. In that case, the proposals with the highest score take precedence until the budget is exhausted. The rest are classified as RESERVE.
As can easily be understood, when drafting the proposal. Particular importance should be attached to the evaluation criteria so that the highest possible score is achieved.
The 2rd Stage is completed with the publication of the results.
In the 3th Stage:
Implementation of the investment begins with the purchase of the equipment or services. Usually, the grant instalments are at least 2. The first instalment is paid when 50% of the investment has been implemented and the second instalment after 100 % of the investment has been completed. It is not excluded that there may also be other intermediate instalments. It should be emphasised that the 3th Stage is also the most difficult.
POINTS REQUIRING ATTENTION
Time frame
When a programme is called, the time frame it gives for submitting the proposal is approximately 2 to 3 months. During this period the entrepreneur should decide whether the programme meets their needs, find a reliable consultant who will undertake the process. They should also find and negotiate the equipment they will purchase, taking into account their financial capacity. Therefore, the above time frame is considered particularly short and requires quick and immediate decisions
Own contribution – bank borrowing
The grant is usually 50%. The remaining 50% is covered by own funds or by a combination of own funds (25%) and bank borrowing (25%)
When submitting the proposal, the existence of the own contribution must be documented and, if the entrepreneur wishes to obtain bank borrowing, a relevant certificate from the bank must be provided.
Many entrepreneurs mistakenly believe that with bank borrowing and some overpricing they can drastically reduce their own contribution. First of all, overpricing of purchases is expressly prohibited by law. As regards the banking system, it is well known that in these years of economic crisis we are going through, banks are extremely sparing in financing. In addition, they require collateral (mainly pre-notes) which may reach 200% of the requested loan.
In short, the programmes effectively help entrepreneurs who are determined to proceed with an investment and have secured the necessary funds.
Implementation
The most difficult stage of the process. By the time of the inclusion decision the entrepreneur has spent time on submitting the proposal and has spent a small amount on consultant fees for preparing it.
Now, after many months since the start of the process, they are called upon to decide on the method of implementation, starting expenses amounting to tens of thousands of euros. It is easy to understand that if something goes wrong, the adverse effects on their business can be decisive.
There are many reasons:
- Failure to secure the operating licence
- Poor cash planning
- Delays in disbursements
- Consumption of funds from current working capital.
Recession of the Greek Economy again
Failure to comply with the conditions and requirements for inclusion, for example the mandatory creation of new jobs.
Lack of sufficient funds for the investment to be carried out
Particular attention should be paid to the investment cash flows. Statistically, and where there are interim instalments of the grant, the business WILL HAVE TO finance part of it for a short period of time. Below is an indicative example of an investment of 100.000 euros with a grant of 50%, own contribution of 25% and bank borrowing of 25%. The grant payments will be made in 3 interim instalments: the 1th instalment after completion of 30% of the investment, the 2th instalment after completion of 60% and the Third instalment after completion of 100%
First instalment 30% Second instalment 60% Third instalment 100% total payments investment cash flows
own contribution 15.000€ 5.000€ 25.000€ 45.000€
bank borrowing 15.000€ 10.000€ 5.000€ 75.000€
grant 15.000€ 15.000€ 20.000€ 25.000€ 120.000€
50.000€
As can be seen from the above table, the mandatory own contribution amounts to 25.000 euros, but for the completion of the investment, an additional 20.000 euros are required, which of course will be returned to the business's cash register upon receipt of the final instalment
CONSULTANT SELECTION
The application for inclusion in a subsidised ESPA programme for an existing or new business is usually accompanied by a mini business plan. The business plan has certain specifications and requirements, which the party seeking a grant may well be unable to meet. Therefore, the assistance of a professional business consultant, who will undertake the preparation of the study, the organisation of the file and the submission of the proposal to the competent body, is deemed necessary.
The Consultant should have experience in drawing up studies for subsidised programmes and in monitoring implementation. It would be advisable for them to have experience in the business's field of activity
MYTHS AND REALITY ABOUT ESPA PROGRAMMES
I won't get the subsidy after all: If you take the right steps, choose the right partners, and implement the programme in accordance with the terms it sets, then, yes, you will get the subsidy. You do not need to worry about that!
I do not need to have my own money: Even if the subsidised programme supports you by 100%, you will need to have some money to 'get by' until you receive the first instalment of the subsidy. As a rule, subsidised programmes provide that you receive the grant on the invoices you have paid. Also, VAT is not subsidised by any programme, which means that it will burden your business.
With overcharging I won't need to put anything out of my own pocket: In most cases the evaluators are equipped with guides of representative prices, and moreover they have the experience to recognise an obvious overpricing.
Let me take the subsidy and we'll see…: The success of each business does not depend on the subsidy. The subsidy comes to reduce your risk by giving you free financing. Success will be shown by whether you manage to sell your product or service in such quantities and at such prices that the business is profitable.
It will take years before I get the subsidy : Each ESPA programme provides for the payment of the subsidy in instalments, over a period of (usually) one to one and a half years. Exactly when you will receive the full subsidy depends on you as well (how quickly you progress with what you declared in the application) but, of course, also on bureaucracy. Therefore, you may receive the subsidy very soon, having made all the expenses and paid the invoices, or you may need to request an extension if you proceed slowly. Bureaucracy may contribute to delays in checks by the service, to funds not being available at the time you request them, or even to delays due to a shortage of staff or inadequacy of information systems. No one, therefore, can predict when you will receive the subsidy, as it depends on many factors, however, in recent years efforts have been made to accelerate procedures in all bodies managing subsidised ESPA programmes.