Small and midsize enterprises (SMEs) will soon be able to compete here and in the international arena, thanks to a program offered by high-street banker ČSOB.

For the first time ČSOB is offering SMEs loans to obtain the highly coveted and internationally recognized ISO (International Organization for Standardization) certification for their products.

The loan program provides up to 1 million Kč ($42,000), to cover expenses related to receiving ISO 9001 quality management and ISO 14001 environmental management certificates.

"Based on available data, more than 70 percent of small and midsize companies here do not posses ISO certificates. At the same time, ISO certification is required in Czech and European tenders and by subcontractors of firms that have won those tenders," said Aleš Pospíšil, head of the small and midsize retail banking department at ČSOB.

Although ISO certification is voluntary, meeting ISO standards concerning health, safety and the environment is a requirement of many markets worldwide.

While ISO certificates provide particular guarantees to customers and boost a product's image, ISO certification is quite expensive to obtain and many smaller firms cannot afford it, said Pavel Ryšánek, a member of the Czech Republic's Quality Council.

"It is essential that [small] companies have access to sources to finance ISO certification," Ryšánek observed.

ČSOB's Pospíšil believes the loan program will open the door to ISO certificates for a large number of SMEs.

"Our loans will be available to corporate clients, as well as individual entrepreneurs, and we will accept a mere bianco bill or [signature] as a collateral," Pospíšil explained.

Low costs

The bank will permit companies to draw up to 1 million Kč to finance expenses to bring production facilities into compliance with ISO standards.

The loan will be granted in stages based on submission of receipts from recognized ISO agencies authorized to verify standards.

Borrowers will be assessed a fee of 2,000 Kč for drawing the loan and 250 Kč per month for maintenance costs. Interest rates on the loan will be based on the interbank interest rate.

"High costs related to ISO certification is a reason many entrepreneurs stay away from [ISO], ... However, such loans could make more entrepreneurs consider [trying to obtain] ISO certification," said Bedřich Danda, chairman of the Association of Czech Entrepreneurs.

The ČSOB's loan program also works in partnership with the Prague Economic Chamber, which has developed a support program to help small firms with staffs of under 39 people obtain ISO certification.

Recently the chamber notified small and midsize businesses that they could achieve ISO 9001 and ISO 14001 certification for as little as 199,000 Kč, or about one-fifth of the average market price. The only condition attached to the Prague Economic Chamber support program is that companies provide it access to company data so it can be rated.

ISO fever

The drive behind certification has increased opportunities for export and fierce competition on the domestic and foreign markets, Danda said.

The Czech Quality Council's Ryšánek suggested that the number of ISO certificate holders in this country rose fivefold over the past seven years. In 1999 there were 1,600, and now there are about 8,000.

"Czech companies have already realized they must pay attention to quality. ... Otherwise they cannot succeed on the market," Ryšánek said, adding that most firms ask for ISO certificates to verify quality management, environmental management, or protection of information.

Apart from ISO certificates, Czech firms may also participate in the government's "Czech Quality" program launched in 2002.

That program provides opportunities to companies that cannot afford to pay for ISO certification, Ryšánek said.

ISO certification can also be financed through the European Union's Phare 2003 – Technology program. So far, Czech firms have drawn about 18 million euros (540 million Kč) from the program, said Radim Konečný, director of development programs in CzechInvest.