Public Sector Investment

1. Borrowers

Public sector business entities - units of local or regional government (municipalities, cities and counties: hereinafter: ULRGs) and companies, institutions and agencies owned or majority-owned by ULRGs and/or the Republic of Croatia. For the purpose of recovery from the consequences of earthquake and for stimulating the economic development of Sisak-Moslavina County - public sector business entities that operate or will operate in Sisak-Moslavina County*.

* HBOR may also consider loan applications for recovery from the consequences of earthquake of public sector business entities operating in Zagreb and Karlovac counties.

2. Purpose of Loans

Capital investments of public sector business entities aiming to encourage projects of environmental protection, energy efficiency and renewable energy resources as well as development of social and business infrastructure in general
Capital investments of public sector business entities for the purpose of recovery from the consequences of earthquake and for stimulating the economic development of Sisak-Moslavina County* or stimulating the economic development of Lika-Senj County
Working capital up to 30% of the contracted loan amount

* HBOR may also consider loan applications for recovery from the consequences of earthquake of public sector business entities operating in Zagreb and Karlovac counties.

3. Manner of Implementation

In cooperation with commercial banks (via commercial banks or through risk-sharing model) - application and related documentation shall be submitted to the commercial bank by the borrower
Direct lending to borrowers - application and related documentation shall be submitted to HBOR by the borrower

4. Loan Amount

Minimum possible individual loan amount:

HBOR’s direct loans: generally, loans in the amount lower than EUR 100,000 are not approved
Loans on-lent via commercial banks: generally, loans in the amount lower than EUR 50,000 are not approved
Loans approved under the risk sharing model with commercial banks: HBOR’s share in a loan can generally not be lower than EUR 100,000;
Loans for the recovery from the consequences of earthquake and for the economic development of Sisak-Moslavina County and loans for the economic development of Lika-Senj County: minimum loan amount is EUR 50,000

Maximum loan amount is not limited and depends on the specific features and creditworthiness of the borrower, purpose and structure of investment as well as available HBOR’s sources of finance. Financing through loan can be up to 100% of the estimated investment value (it is also possible to finance the corresponding VAT).

5. Loan Currency

EUR

6. Interest Rate

Interest rate for each individual loan is determined by HBOR (for direct loans), or by commercial bank (for loans via commercial banks), where the so determined interest rate can be subsidised/reduced*, depending on available funds of the Ministry of Finance or HBOR:

by 0.80 p.p. for investments in special areas of the Republic of Croatia and/or green projects and/or digitalisation and/or RDI and/or social infrastructure
by 0.30 p.p. for other investments.

In certain cases, the above interest rates and/or interest rate reductions can differ from the above depending on the limit of maximum possible amount of interest subsidy and/or aid rules.

The maximum possible amount of interest rate subsidy for an individual loan is generally EUR 500,000.00.**

It is not possible to combine subsidies from the funds of the Ministry of Finance and/or HBOR.

Interest subsidy from the funds of the Ministry of Finance and HBOR may be approved until the available funds have been used up.

*The criteria for establishing special areas of the Republic of Croatia, green projects, digitalisation, research, development and innovation (RDI) and social infrastructure are defined by the General Eligibility Criteria that make a constituent part of this programme.

**As an exception, in case of projects exceeding EUR 10,000,000.00, with a repayment period longer than 12 years, which significantly contribute to the achievement of HBOR's strategic goals, an interest subsidy can be approved from the funds of the Ministry of Finance or from HBOR’s funds (only for HBOR’s direct loans) of up to EUR 1,000,000.00.

7. Fees

Variable, in accordance with the Ordinance on Fees for HBOR Services valid on the day of calculation:

Loan application processing fee:
- 0.50% on the contracted loan amount;
- to ULRGs and institutions and agencies majority-owned by them and/or majority-owned by the Republic of Croatia: 0.20% on the contracted loan amount;
Commitment fee: no fee

and other fees in accordance with the Ordinance on Fees for HBOR Services valid on the day of calculation. On loans intended for the recovery from the consequences of earthquake and for the economic development of Sisak-Moslavina County or the economic development of Lika-Senj County:

no loan application processing fee
no commitment fee
no fee for changing the terms and conditions of loan

Other fees in accordance with the Ordinance on Fees for HBOR Services valid on the day of calculation.

Loan application processing fee is not charged on direct loans under NRRP guarantee*.

*Financial Instrument: Guarantee Fund for Loans to Mid-Caps and large enterprises.

8. Period and Manner of Loan Disbursement

Generally, up to 12 months. Depending on the purpose and the dynamics of investment, it is also possible to approve a longer period of loan disbursement.
Part of the loan intended for the financing of fixed assets is disbursed to the account of seller/supplier/contractor based on the documentation for utilisation of loan for earmarked purposes
Part of the loan intended for the financing of working capital can be disbursed to the account of the borrower, with obligatory justification by documentation evidencing the use of loan for earmarked purposes*

*If ULRG or an institution/agency majority-owned by ULRG or the Republic of Croatia requested the disbursement of funds to its own account in its loan tender, and not directly to suppliers or contractors, the funds may be disbursed in accordance with the loan tender.

9. Repayment Period

Up to 15 years, with up to 5-year grace period included, depending on the purpose and structure of investment

As an exception to the mentioned, depending on the purpose and structure of investment, for investments in tourism or if the investment study indicates the need for longer maturity, it is possible to approve the repayment period of up to 17 years, up to 4-year grace period included.

10. Manner of Repayment

Generally, in equal monthly, three-monthly or semi-annual instalments

11. Collateral

Financing of ULRGs is possible if secured only with a bill of exchange and a debenture, depending on the assessment of HBOR and/or the commercial bank
For loans to other public sector business entities:
- Lending in cooperation with commercial banks: collateral is determined by the commercial bank
- Risk sharing model: collateral is determined by the commercial bank and HBOR
- Direct lending: HBOR agrees the collateral with the borrower in accordance with HBOR’s internal documents (e.g. bills of exchange, debentures, pledge of property with insurance policy for the property endorsed in favour of HBOR, bank guarantees and other security instruments customary in banking operations), and the risk assessment of the investment and the borrower

12. Related Documentation / Schedules

General Eligibility Criteria, Annex 1.2 - Paris Agreement Alignment; Annex 2 - Green Eligibility Table
List of Documentation and Commercial banks
Decision on General Terms and Conditions of Lending Activities of HBOR
Information on Base and Discount Rates and Reference Rates

13. Others

In the implementation of financial instruments, the beneficiaries of EU funds and other third parties that provide information on EU programmes use the emblem of the EU with the funding statement in the following wording: “Funded by the European Union - NextGenerationEU” available at the link: https://ec.europa.eu/regional_policy/en/information/logos_downloadcenter/
Sample generator: https://www.euinmyregion.eu/generator

The views and opinions expressed are solely those of the author and do not necessarily reflect the official views of the European Union or the European Commission. Neither the European Union nor the European Commission can be held responsible for them.