Taiwan looks to help startups stay afloat with new investment program
Since April, the National Development Fund (NDF) of Taiwan has been accepting applications for funding under a special investment program that expects to help more than 3,000 startups survive the coronavirus pandemic.
The NDF is the investment arm of the National Development Council (NDC), the policy-planning agency of the executive branch of the central government.
With NT$560 billion under management, NDF plans to offer six to twelve months of funding in exchange for preferred stock; it doesn’t give shareholders the right to vote on company policies and decisions.
According to its official page, all startup companies affected by the COVID-19 crisis are eligible to apply for the program, if they’re owned by Taiwanese or based in Taiwan.
Applicants must spell out why they qualify as a startup, how their business is impacted, and how funds will be used if granted to them. They also need to provide the conditions for issuing the stock and explain how they want to redeem the stock.
In principle, the NDC says the stock should be redeemed in two years, but conversion to common stock is also an option.
NDC Minister Chen Mei-ling says despite many ways to define what a startup is, innovation in business model is the key determinant of whether the council considers a company to be a startup.
Bryan Huang, attorney at Taipei Law, adds that companies registered overseas must state in the application that their principal place of business is in Taiwan.
Startup companies should submit applications during a period of six months, from April to September. But an extension is possible if the outlook for the global economy continues to worsen.
To ensure that companies receive funding within a month, the NDC says it accepts applications on a rolling basis, reviewing each application as it arrives.
The council also permits startups who have benefited from the program to apply for the stimulus loans offered by the Ministry of Economic Affairs and public banks.
Earlier this month, the central government announced a stimulus package worth NT$1.05 trillion to cushion the economy from coronavirus fallout, and according to Premier Su Tseng-chang, it’s possible that the government makes it a bigger one if the viral disease continues to spread around the globe.
A number of stimulus provisions, from funds to loans, are aimed at helping SMEs across industries hard hit by the coronavirus pandemic: service, tourism, retail, restaurant, and manufacturing. Premier Su says the government has reached a consensus with banks on speeding up the process of reviewing loan applications.
The Ministry of Finance has also cut interest rates for companies and ordered banks to defer the repayments on existing personal or business loans.
To prevent mass layoffs, the Ministries of Labor, Finance, and Economic Affairs help subsidize employee training. They will also cover the expenses of organizing training sessions as well.
〔Original :Meet Startup @ TW〕
https://meet.bnext.com.tw/intl/articles/view/46349