The Croatian Bank for Reconstruction and Development (HBOR) has launched a new Operational Programme for the implementation of the Guarantee Fund Financial Instrument for Loans to Medium Capitalisation Companies and Large Business Entities within the framework of the financial instruments it implements under the National Recovery and Resilience Plan (NRRP). With the establishment of this Programme, for and on behalf of the Republic of Croatia, HBOR issues guarantees for large and medium capitalisation companies for the first time, and the beneficiaries of the guarantees can be commercial banks, leasing companies and HBOR as a lender.
The main goal of the newly introduced instrument is to facilitate access to financing for medium capitalised companies and large business entities through the issuance of a guarantee. A special emphasis is put on green and technological transition. The intention is to encourage investments in tangible and intangible assets with an objective of launching, modernising and digitalising business, implementing new technologies, strengthening capacity, developing and introducing new products or services, investing in environmentally friendly production processes and resource efficiency, research and development and similar activities. Furthermore, up to a maximum of 30 percent of the loan funds can be used for investments in working capital necessary for the implementation of investments and the growth of the company’s operations.
“With this programme, HBOR offers a high-quality guarantee product to the market at extremely low costs that can be combined with favourable financing. I am positive that both the private and public sectors will recognise the importance of this financial instrument. It is common practice to use the guarantees of cities and municipalities when extending loans to companies owned by local and regional government units, which reduces and limits the budget space. HBOR’s new guarantee will free up space in the budgets, and it will be possible to use these funds for some other purposes and projects in the local community”, said Hrvoje Čuvalo, President of the Management Board of HBOR.
The amount of EUR 79.6 million (HRK 600 million) has been allocated to HBOR for this Financial Instrument under the funds of the NRRP, and the total guarantee potential for issuing guarantees will amount to approximately EUR 400 million (HRK 3 billion).
Maximum guarantee coverage is up to 80 percent of loan principal for special target groups (investments in special areas of the Republic of Croatia; green transition; digital transition; research, development and innovation) and up to 70 percent of loan principal for other investments. Within the framework of issuing guarantees, entrepreneurs are also provided with a guarantee fee subsidy of up to 100 percent of the amount, depending on the rules on state aid, as well as an interest subsidy on the loan for which the guarantee is issued of up to 75 percent of the regular interest rate, depending on the type of investment and the rules on state aid.
It is important to emphasise that, at the beginning of this year, HBOR signed agreements with fifteen commercial banks on cooperation in subsidising interest under the NRRP funds. A subsidy of up to 3 percentage points is awarded depending on the purpose and type of investment, and it can amount to up to 75 percent of the interest rate for green and digital transition, up to 65 percent of the interest rate for investments in special areas of the Republic of Croatia or in research, development and innovation and for investments of the public sector aimed at mitigating the consequences of the earthquake, or up to 50 percent of the interest rate for other investments in competitiveness and resilience.