Micro loans to be cancelled after 3 months by operation of law

With the entry into force of the Anti-Crisis Shield, entrepreneurs have the opportunity to receive a low-interest loan of up to PLN 5,000 granted by the District Labour Office to cover the expenses related to current costs of running a business, e.g. paying taxes, contributions or costs of renting premises.

Persons with a status of micro-entrepreneurs employing up to 9 employees, running a business before 1 April 2020, can apply for a loan. In addition, from 18 April 2020, self-employed persons are also entitled to a loan.

How the loan will be cancelled?

Initially, the provisions of the Anti-Crisis Shield provided that in order to cancel a loan (with interest), entrepreneurs would require to submit an application. However, currently, due to the entry into force of the 4.0 Anti-Crisis Shield, the only condition for loan cancellation is running a business for 3 months from the date of extending the loan, i.e. from the date the funds are credited to the entrepreneur’s account. Therefore, the obligation to submit an application to cancel the loan has been abolished both for micro-entrepreneurs and for the self-employed.

The loan will be cancelled automatically after the entrepreneur has been verified by the labour office. The said verification of whether the business activity is actually carried out after 3 months from extending the loan will be possible via the Central Register and Information on Economic Activity (CEIDG) or the National Court Register (KRS). Thus, the entrepreneur will not have to remember to submit any additional applications.

What about entrepreneurs who applied for a loan before the entry into force of the 4.0 Anti-Crisis Shield?

The amendment which abolished the obligation to submit an application for cancelling the loan entered into force on 24 June 2020. Persons who applied for a loan after that date had already signed updated loan agreements, according to which it would no longer be required to submit an application for cancellation after 3 months.

Unfortunately, the amended wording of the act did not resolve in any way whether the automatic cancellation would apply only to new loans or also to those taken before the amendment to the Anti-Crisis Shield came into force.

Although the provisions of the act do not resolve this issue, both individual labour offices and the Ministry of Family, Labour and Social Policy ensure that automatic cancellation will apply to all entrepreneurs who took out a loan.

The official letter of the Ministry of Family, Labour and Social Policy says that “The cancelling procedure has been simplified and the office will check whether a microentrepreneur has met the conditions for cancellation. This means that the borrower no longer has to submit a cancellation application. The new rules apply to all loans regardless of the time they were granted. Thus, an entrepreneur who concluded a loan agreement before the entry into force of the 4.0 Shield does not have to submit a cancellation application; if he meets the conditions for cancellation, the loan will be cancelled by operation of law.”

Learn more: Micro loans to be cancelled after 3 months by operation of law

Failure to meet the condition of running a business

If the condition of running a business is not met, the borrower will be required to repay the loan within 12 months in accordance with the schedule set by labour office. If instalments are not repaid on time, statutory interest will be charged from the date the instalment becomes due until the date of its payment.

It is also worth noting that a delay in repayment at least two instalments may constitute the basis for the termination of the loan agreement. In this case, the borrower will be obliged to repay the loan within 30 days from the date of termination of the agreement.

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