EU state aid regulators to ease bailout rules for small firms, startups

FILE PHOTO: European Union flags flutter outside the European Commission headquarters in Brussels, Belgium, June 5, 2020. REUTERS/Yves Herman

BRUSSELS (Reuters) - EU competition regulators plan to loosen the bloc’s state aid rules to make it easier for private investors to team up with EU governments to bail out virus-hit start-ups and small companies, and also to allow aid to firms struggling even before the pandemic.

The European Commission said on Friday it would amend its rules to allow private investors to help recapitalise start-ups and small companies, including those in which the state holds a stake.

It said incentives would be provided to private investors to encourage them to take part and to lighten the burden on state coffers.

A separate change would allow state aid offered to small companies that were hit by the coronavirus to be granted also to those that were in trouble before the virus hit.

“This amendment will effectively increase the possibilities to support start-up companies, especially innovative ones which may be loss-making in their high-growth phase, which are crucial for the economic recovery of the Union,” the Commission said.

It is now seeking feedback from the 27 EU countries before it decides on a final draft.

Reporting by Foo Yun Chee; Editing by Peter Graff