If, under the Demján Sándor 1+1 SME Investment Stimulus Grant Program, a circumstance arises as a result of which the full amount or part of the grant must be repaid, a debt recovery process may be initiated. It is worth being aware of exactly when this may occur, which deadlines should be observed, and what steps may follow.
When may a repayment obligation arise?
Debt recovery may arise, among other cases, if withdrawal from the Grant Award Document, revocation of the Grant Award Document, or an amendment to the Grant Award Document results in a reduction of the awarded grant amount.
A repayment obligation may also arise if the Beneficiary has used the grant unlawfully or has not used part of the grant. In such cases, the full amount of the advance already paid or a portion thereof must be repaid.
How does the debt recovery process begin?
As the first step of the process, the Program Operator, i.e. the Hungarian Economic Development Agency, sends a notification to the Beneficiary via the Company Gateway.
From the date of receipt of the letter, or from the date on which it is deemed to have been delivered, the Beneficiary has 30 days to fulfil the repayment obligation. Therefore, it is particularly important to monitor the Company Gateway regularly, as the deadlines are linked to delivery.
What happens if repayment is not made by the deadline?
If the Beneficiary does not repay the required amount within the 30-day deadline, the Program Operator sends a repeated payment notice. In this case, only 8 days remain to fulfil the obligation. An important consequence is that default interest is also charged on the principal amount claimed back, until the date on which the repayment obligation is fulfilled.
This means that any delay may increase the amount payable, so it is advisable to check the legal basis, amount and deadline of the payment obligation immediately after receiving the first notification.
What further steps may follow?
If the Beneficiary still fails to fulfil the repayment obligation despite the repeated notice, the Program Operator may enforce the security in accordance with the Grant Award Document. This may take place by way of a collection order based on an authorisation. If this is unsuccessful, or only partially successful, the Program Operator may initiate the enforcement of the claim through the National Tax and Customs Administration, in the manner applicable to tax debts.
Why is advance preparation important?
The lawful use of grants is important not only during project implementation, but throughout the entire grant relationship. In the event of a grant reduction, amendment to the Grant Award Document or revocation, the Beneficiary must react within a short deadline. Therefore, well-organised project administration and continuous financial monitoring can significantly reduce risks.
In order to avoid the debt recovery process, it is advisable to ensure already during project implementation that the undertaken obligations are fulfilled, the use of the grant is properly documented, and any amendment or deviation is handled in time.
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