On microfinancing of small and medium-sized businesses by DPR CRB

Extracts for legal literacy News

As part of legal education, we inform you that by Decree of the Head of the Donetsk People’s Republic dated April 3, 2022 No. 121 “On the State Defence Committee of the Donetsk People’s Republic”, the State Defence Committee of the Donetsk People’s Republic (hereinafter DPR SDC) was established. The creation of the DPR SDC is due to the conduct of a special military operation in the territories of the DPR, LPR and Ukraine. DPR SDC is the highest emergency state body of the Donetsk People’s Republic.

Thus, in order to develop the economy of the Donetsk People’s Republic, the Central Republican Bank, in accordance with the Decree of the DPR SDC dated April 15, 2022 No. 22, was instructed to start implementing a program of state support for legal entities and individuals – entrepreneurs of the DPR, classified as small and medium-sized businesses, through their microfinancing at the expense of own funds (capital) of the DPR CRB.

Microfinancing by the CRB of business entities is a flexible form of bank credit in the amount of up to 5,000,000.00 (Five million) Russian roubles 00 kopecks. This makes it possible to start and develop a business, including without the availability of start-up capital and credit history. Microfinancing of economic entities is carried out in order to assist in the accumulation of capital for economic entities registered and operating on the territory of the DPR, and is aimed at increasing the number of economic entities, additionally stimulating the production of civilian products, creating additional jobs and, as a result, increasing tax revenues, share of non-cash payments in the state economy.

Microfinancing is carried out on the basis of the principles of urgency, repayment, payment, purposeful application and supportability.

In addition, microfinancing is carried out in the amount of 100,000.00 (One hundred thousand) Russian roubles 00 kopecks to 5,000,000.00 (Five million) Russian roubles 00 kopecks to one microfinance recipient and under one of the microfinance programs.

It should be noted that microfinance is not provided for:

1) payment of the arrears to participants (founders) for the payment of income;

2) purchase of shares of participants (founders) in the authorized capital;

3) return or financial assistance;

4) discharge any obligations to the CRB, credit organizations, including for payment of the arrears on loans granted to an economic entity and discharge obligations to pay interest and commissions under loan agreements concluded by an economic entity;

5) payment of the arrears under leasing agreements;

6) purchase or payment of promissory notes by an economic entity;

7) provision or payment of arrears;

8) purchase and payment of equity securities;

9) investments in the authorized capital of other legal entities;

10) purchase from the CRB or a credit institution of property received as compensation in exchange for the fulfilment of obligations of an economic entity on previously granted loans;

11) placement of funds on deposit accounts in the CRB or a credit institution.

It has been determined that economic entities that simultaneously meet the following requirements can become applicants for microfinancing by the CRB if they:

1) are registered and operating in the Donetsk People’s Republic;

2) are related in accordance with the legislation to small and medium-sized businesses;

3) are not related to business entities: – engaged in the production and (or) sale of excisable goods (products); — being credit institutions, non-credit financial institutions; — being parties of agreements on sharing productions; – carrying out entrepreneurial activities in the field of gambling business; – being, in accordance with the procedure established by the legislation of the Donetsk People’s Republic on currency regulation and currency control, are non-residents of the DPR, with the exception of cases provided for by international treaties of the Donetsk People’s Republic;

4) do not have debts on taxes, dues and other obligatory payments in accordance with the Law of the Donetsk People’s Republic of December 25, 2015 No. 99-IHC “On the tax system” as of the first day of the month in which the application was submitted;

5) have confirmation of discharging the obligations under the microfinance agreement;

6) are not in the stage of reorganization, liquidation and (or) bankruptcy, as well as don’t have restriction of rights in accordance with the current legislation as of the first day of the month in which the application is submitted;

7) have a current account in the CRB;

8) do not have overdue debts on credit transactions for more than 30 days during the last 12 months;

9) do not have arrears in payment of wages to employees as of the first day of the month in which the application is submitted;

10) do not have restrictions on the right to manage funds in their bank accounts, as well as do not have obligations under effective but unfulfilled court decisions on the recovery of funds from them in favour of third parties as of the first day of the month in which the application is submitted;

11) are not recipients of leasing;

12) for an individual – entrepreneurs, the minimum age should be 21 years, the maximum age – 55 years as of the date of return of funds, determined by the microfinance agreement.

For detailed information on the issue of microfinancing of small and medium-sized businesses, citizens have the right to contact the DPR CRB: tel. — +38071-0995029, +38062-2067870, email – [email protected].