EIF guarantees to HBOR unlock up to €50m in loans to support faster recovery of Croatian SMEs and small mid-caps from the COVID-19 pandemic;
The guarantees are extended under the Pan-European Guarantee Fund (EGF), a €25 billion guarantee fund established by the EIB to accelerate post-COVID recovery of European companies;
This is the third EGF operation in Croatia bringing the total amount of loans that can be protected by the EGF to €350m
The European Investment Fund (EIF), a part of the European Investment Bank Group (EIB Group) will provide guarantees worth €35 million to Croatian Bank for Reconstruction and Development (HBOR), allowing the Croatian public-owned development bank to originate a portfolio of €50 million of financing for Croatian small and medium enterprises (SME) and small mid-caps looking to mitigate economic consequences of COVID-19 pandemic.
The EIF guarantees stem from the Pan-European Guarantee Fund (EGF), a €25 billion guarantee facility set up by the EIB Group in 2020 to accelerate the post-COVID-19 recovery of European economy, safeguard jobs, and provide much needed liquidity to European SMEs.
The EGF guarantees will allow HBOR to offer loans to Croatian SMEs and small mid-caps under more favourable terms including reduced interest rates or lower collateral requirements. The loan will available to SMEs and small mid-caps operating in some of the hardest hit sectors of the Croatian economy including tourism and manufacturing.
Roger Havenith, Deputy Chief Executive of the EIF said: “I am delighted to sign the third EGF guarantee in Croatia in under two months, unlocking a further 50 million EUR to help with the faster recovery of Croatian SMEs hit by the economic impact of COVID-19. This demonstrates, once again, our commitment to the economic and social development of Croatia and underlines our readiness to support Croatian financial institutions in creating new credit lines for small businesses in the context of the COVID-19 recovery. The EIF looks forward to increasing this support further in the days and weeks to come and would like to thank HBOR, our long-standing partner for their cooperation.”
Tamara Perko, President of the Management Board of HBOR said: “We are very pleased that we have become a partner of the EIF in the implementation of this instrument. HBOR will use these guarantees for directly approved loans under the existing loan programmes to provide even more favourable conditions to our entrepreneurs: loan approvals at interest rates reduced by 0.403 pp compared to the regular ones or with lower collateral requirements, i.e. loan approvals will be possible only with bills of exchange and promissory notes as collateral. These benefits will be used for working capital and investment loans.“
EGF approves nearly half its planned 2021 financing for SMEs, mid-caps and public sector
This is the third EGF operation signed in Croatia following similar agreements with and it brings the total amount of loans to be guaranteed by the EIB Group`s EGF mechanism to €350 million in Croatia alone. The country is one of 22 EU-member countries participating and benefiting from the EGF.
The (EGF) has approved funding amounting to almost half its target for 2021. After clearance under the EU state aid notification process in December 2020, the initiative has now approved €11.7 billion in support of European businesses struggling with the economic fallout of the COVID-19 pandemic. This is almost half the fund’s target for 2021.
The fund mobilises additional financing, and initiatives approved so far are expected to generate EUR 93.9 billion in funding and investments for the EU economy. Demand for EGF financing is strong, and further approvals and signatures are expected to rapidly bring the EGF well beyond 50% of its target by early summer.