A small business guide to the EU’s COVID-19 relief package
Last year, following the outbreak of the COVID-19 pandemic, the European Union took action to help drive economic recovery and better prepare the European economy for the future by creating NextGenerationEU, a support package.
Designed to help all aspects of European society, the NextGenerationEU package will be an important support scheme for small businesses emerging from the pandemic. Here you can find out more about NextGenerationEU and how it could help your business.
(Note: with the UK formally leaving the European Union on January 1st 2021, UK companies will not be able to apply for loans and grants under the NextGenerationEU support package)
What is Next Generation EU and the Recovery and Resilience Facility (RRF)?
In April 2020, the European Union (EU) decided that action be taken to establish an EU recovery fund to help mitigate the effects of the COVID-19 crisis. Then, the European Commission established a new proposal for the EU’s long-term budget which would help combat the immediate effects of the pandemic in May 2020.
In July, the EU agreed on a €750bn recovery package, called NextGenerationEU, to help EU member states tackle the impacts of the pandemic. This forms part of the EUs €2.4tn long-term recovery package for 2021-2027.
The RRF has been made to allow member states to construct schemes which create tangible benefits for the economy and citizens across the EU. These schemes should be built to address common issues that affect all member states, such as striving for greater sustainability and drive digital transition in all facets of society. As part of the plans, the EU has mandated that at least 20% of the RRF go towards digital transition.
Here are the focus areas the commission has encouraged member states to focus on when drafting their recovery and resilience plans:
Power up – Using green technologies and speeding up the integration of renewable energies.
Renovate – Improving the energy efficiency of public and private buildings.
Recharge and refuel – Providing access to clean and sustainable smart transport as well as charging and refuelling stations.
Connect – Accelerating the roll-out of super-fast broadband services such fibre and 5G networks.
Modernise – Upgrading public administration and services through technology
Scale-up – Expanding European industrial data cloud capacities while developing the most powerful and sustainable processors yet.
Reskill and upskill – Adapting education systems to promote digital skills, educational and vocational training for all ages.
Why does it affect small businesses?
This fund could stand to be a huge support scheme for small-to-medium sized businesses across Europe. Over the past year, businesses have had to strongly adapt their processes to work effectively during the pandemic. Whether that’s been through creating remote working schemes or incorporating new technology into their business processes, many business leaders have had to digitise in order to survive.
With the allocation of the RRF to member states, small businesses across the 18 states will be able to apply for grants and loans to help support and strengthen their businesses. With at least 20% of the package going towards driving digital transition, small businesses will not only be able to use the funds to immediately support themselves, but they can also invest it in digital capital which, in the long run, will help prepare them for their digital future.
When is it happening?
As of January 2021, the European Commission has started committing funds under the next Multiannual Financial Framework (the EU’s long-term budget).
However, before businesses can apply for grants and loans from NextGenerationEU, member states must submit their proposals for how they will use these funds to help their own economies. While governments are working hard to draft these plans, it’s not clear how long this process will take.
In the long term, the European Commission has set out that:
2023: Recovery and resilience resources for member states can be committed until the end of 2023
2026: Reforms and investments must be carried out by 2026
How can you apply for a grant?
The application process will be confirmed by the European Union once all plans have been received from the member states.
For more information, check your local government page:
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