Translated using ChatGPT service.
The Cabinet of Ministers today approved amendments developed by the Ministry of Economics to the regulations on productivity loans for business innovation, with the aim of making the support program more accessible to entrepreneurs.
The program is intended for companies planning to develop new, innovative products, including dual-use solutions for both civilian and military applications. Support is also available for the construction of new production facilities, the purchase of equipment, expansion of production capacity, and the creation of new jobs in Latvia’s smart specialization (RIS3) sectors.
The total available funding for the program is €100 million. Of this, €49.6 million comes from the European Regional Development Fund (ERDF), €8.7 million from the state budget, and €41.6 million from financing raised by the development finance institution ALTUM.
Entrepreneurs will be able to receive support in two directions.
First, for the development of innovative products, with loans ranging from €300,000 to €5 million, along with the possibility to receive a capital discount of up to 30%, or a maximum of €1.5 million. To qualify for this support, an opinion from the Latvian Council of Science or the Ministry of Defence confirming that the product meets the criteria for an innovative product will be required.
The second support direction is aimed at research and development activities, with loans from €300,000 to €1 million (without a capital discount), aimed at supporting experimental development, feasibility studies, and design services for the introduction of new product and process innovations.
A key change is the significant reduction in the requirements that companies must meet to receive the capital discount. Previously, one of the criteria was an investment of at least €250,000 in research and development, but going forward, €50,000 will be sufficient. The threshold for creating new jobs has also been lowered – from six to two jobs – or the option to retain existing jobs with a specified increase. The capital discount will be granted gradually over a period of three years, with one-third (10% of the total capital discount amount) allocated each year, provided that the company meets the required performance indicators for that year.
Additionally, the process for obtaining opinions and the conditions for state support have been simplified and clarified to reduce the administrative burden on entrepreneurs and ensure clarity regarding the support application process.
Several rounds of coordination with industry organizations and relevant institutions were carried out during the drafting of the regulations. The Ministry of Economics has taken into account suggestions from both the industry and partners to ensure that the final solution is both effective and aligned with the needs of businesses.