FAQ Production Modernisation Loans
1. Who can be the borrowers?
Private sector business entities, which at the moment of submitting loan application, i.e. at the moment of loan approval, meet the following criteria:
a) micro, small and medium-sized enterprises pursuant to the definition from the Recommendation of the European Commission 2003/361/EC of 6.5.2003;
b) registered in accordance with the National Classification of Activities 2025 - NKD 2025 (Narodne Novine, the official gazette of the Republic of Croatia No. 47/2024) for performing activities in the area of manufacturing in Section C, except for those excluded by the applicable state aid rules and the ERDF and by this Loan Programme;
c) have a registered business unit or a branch in the Republic of Croatia not later than at the moment of entering into loan contract.
2. What is the purpose of the loans?
Loans are intended for investments in fixed assets (investments in tangible and intangible assets that are related to “initial investment” referred to in Article 2, item 49 of the Commission Regulation (EU) No. 651/2014), and in working capital of up to 30% of contracted loan amount.
3. What is considered to be an eligible investment under this Programme?
Eligible investments are investments in tangible and intangible assets related to: establishment of a new business unit, expansion of capacities of an existing business unit, diversification of a business unit's production into products that the respective business unit did not produce previously, fundamental change in the overall production process of an existing business unit.
Eligible investments may also include the following activities if they are related to “initial investment” referred to in Article 2, item 49 of the Commission Regulation (EU) No. 651/2014: strengthening of digital skills and employee education for the use of procured solutions (including e-Learning platform), implementation of new/reconstruction of existing accessibility elements (measures in accordance with the Technical Regulation on Providing Accessibility of Buildings for Persons with Disabilities and Reduced Mobility (Narodne Novine, the official gazette of the Republic of Croatia No. 12/2023)) and investments in renewable energy sources.
Ineligible investments are defined in Schedule 1 to the Loan Programme: Ineligible Activities and Borrowers; for more information, please visit the Loan Programme website
4. Is it possible to obtain capital discount under this Programme, i.e. a write-off of a part of loan principal amount?
A borrower can exercise a right to a capital discount, i.e. a write-off of a part of loan principal amount. Capital discount is approved in accordance with the aid regulations and constitutes an aid in the form of a grant. The right to a capital discount is realised upon the fulfilment of the given criteria and it can amount to a maximum of 50% of the totally disbursed loan principal amount, provided that the amount of the calculated capital discount is written off from the part of the loan principal from the ERDF funds. The criteria for the capital discount and the percentage of a write-off of a part of loan principal that can be realised on the basis of each fulfilled criterion are defined in Schedule 2 to the Loan Programme: Criteria for Capital Discount; for more information, please visit the Loan Programme website.
5. What is the minimum loan amount?
The minimum loan amount is EUR 100,000, and the maximum loan amount is EUR 3,000,000.
HBOR can generally finance up to 85% of the estimated investment value in accordance with the state aid rules.
If a borrower is granted regional aid, the borrower must provide a financial contribution of at least 25% of eligible costs (exclusively for investments in fixed assets) from its own or other sources, in a form free of any state aid, in accordance with the state aid rules, i.e. up to 75% of the estimated investment value can be financed.
The estimated investment value does not include VAT, except for the borrowers supplying goods or providing services exempt from VAT and/or for the borrowers that do not operate in the VAT system.
6. How is loan application submitted?
Application and related documentation shall be submitted to HBOR by the borrower via the following link.
7. Is the interest rate charged under this Programme fixed?
The interest rate charged on the part of loan principal from the ERDF funds is 0.00% p.a., fixed, and the interest rate charged on the part of loan principal from HBOR funds is fixed and is determined separately for each individual loan on the basis of risk assessment.
8. Are the loan application processing fee and commitment fee charged?
Neither loan application processing fee nor commitment fee is charged, whereas other fees in accordance with the Ordinance on Fees for HBOR Services valid on the day of calculation are charged on the part of loan financed from HBOR’s funds. Other fees are not charged on the part of loan financed from the ERDF funds.
9. What are the loan disbursement period and the loan disbursement manner?
Generally, disbursement period is up to 12 months; whereas, depending on the purpose and dynamics of investment, it is also possible to approve a longer period of loan disbursement. Part of the loan amount intended for the financing of fixed assets is disbursed to the account of the seller / supplier / contractor based on the documentation providing evidence of loan utilisation for earmarked purposes, whereas part of the loan amount intended for the financing of working capital can be disbursed to the account of the borrower with obligatory justification by documentation evidencing loan utilisation for earmarked purposes.
10. What are the loan repayment period and the loan repayment manner?
Repayment period is, depending on the purpose and structure of investment, up to 15 years, including a grace period of up to 3 years, and the manner of loan repayment is generally in equal monthly, three-monthly or semi-annual instalments.
11. How are collateral instruments determined?
Collateral instruments are determined in accordance with HBOR’s internal documents (e.g. bills of exchange, debentures, blank debentures, pledge of property with insurance policy for the property endorsed in favour of HBOR, business shares insurance, bank guarantees and other security instruments customary in banking operations) and the risk assessment of the investment and the borrower.
12. Is the construction of a commercial building considered eligible for financing?
Such a project can be financed.
13. Can the subject matter of an investment be investment in renewable energy sources?
In accordance with item 3 of the Loan Programme, investment in renewable energy sources is eligible if it is related to the initial funding referred to in Article 2 item 49 of Regulation (EU) No. 651/2014:
„initial investment” means:
(a) an investment in tangible and intangible assets related to the setting-up of a new establishment, extension of the capacity of an existing establishment, diversification of the output of an establishment into products not previously produced in the establishment or a fundamental change in the overall production process of an existing establishment; or
(b) an acquisition of assets belonging to an establishment that has closed or would have closed had it not been purchased, and is bought by an investor unrelated to the seller and excludes sole acquisition of the shares of an undertaking.
14. Is it acceptable to invest in the extension of premises related to production, for which a contract for the procurement of works had been signed before the loan application was submitted, but the contractor was not introduced to the work, works on the construction site were not started, and the construction log was not started?
If the contract for the procurement of works had been signed before the loan application was submitted or the investment announced, the investment would not be eligible.
15. Is it necessary to submit a statement of an expert witness for each individual item of investment, i.e. for each machine separately, or is it acceptable to list all investment items that belong to Industry 4.0 in one statement, and in another statement the items that fall under digitalisation?
One statement from an expert witness is sufficient for the entire investment.
16. Must the activity from the area of manufacturing (Section C) be the main (predominant) activity of the borrower or is it sufficient that it is one of the activities for which the borrower is registered?
One of the activities for which the business entity is registered must be from Section C - Manufacturing industry.
Private sector business entities, which at the moment of submitting loan application, i.e. at the moment of loan approval, meet the following criteria:
a) micro, small and medium-sized enterprises pursuant to the definition from the Recommendation of the European Commission 2003/361/EC of 6.5.2003;
b) registered in accordance with the National Classification of Activities 2025 - NKD 2025 (Narodne Novine, the official gazette of the Republic of Croatia No. 47/2024) for performing activities in the area of manufacturing in Section C, except for those excluded by the applicable state aid rules and the ERDF and by this Loan Programme;
c) have a registered business unit or a branch in the Republic of Croatia not later than at the moment of entering into loan contract.
2. What is the purpose of the loans?
Loans are intended for investments in fixed assets (investments in tangible and intangible assets that are related to “initial investment” referred to in Article 2, item 49 of the Commission Regulation (EU) No. 651/2014), and in working capital of up to 30% of contracted loan amount.
3. What is considered to be an eligible investment under this Programme?
Eligible investments are investments in tangible and intangible assets related to: establishment of a new business unit, expansion of capacities of an existing business unit, diversification of a business unit's production into products that the respective business unit did not produce previously, fundamental change in the overall production process of an existing business unit.
Eligible investments may also include the following activities if they are related to “initial investment” referred to in Article 2, item 49 of the Commission Regulation (EU) No. 651/2014: strengthening of digital skills and employee education for the use of procured solutions (including e-Learning platform), implementation of new/reconstruction of existing accessibility elements (measures in accordance with the Technical Regulation on Providing Accessibility of Buildings for Persons with Disabilities and Reduced Mobility (Narodne Novine, the official gazette of the Republic of Croatia No. 12/2023)) and investments in renewable energy sources.
Ineligible investments are defined in Schedule 1 to the Loan Programme: Ineligible Activities and Borrowers; for more information, please visit the Loan Programme website
4. Is it possible to obtain capital discount under this Programme, i.e. a write-off of a part of loan principal amount?
A borrower can exercise a right to a capital discount, i.e. a write-off of a part of loan principal amount. Capital discount is approved in accordance with the aid regulations and constitutes an aid in the form of a grant. The right to a capital discount is realised upon the fulfilment of the given criteria and it can amount to a maximum of 50% of the totally disbursed loan principal amount, provided that the amount of the calculated capital discount is written off from the part of the loan principal from the ERDF funds. The criteria for the capital discount and the percentage of a write-off of a part of loan principal that can be realised on the basis of each fulfilled criterion are defined in Schedule 2 to the Loan Programme: Criteria for Capital Discount; for more information, please visit the Loan Programme website.
5. What is the minimum loan amount?
The minimum loan amount is EUR 100,000, and the maximum loan amount is EUR 3,000,000.
HBOR can generally finance up to 85% of the estimated investment value in accordance with the state aid rules.
If a borrower is granted regional aid, the borrower must provide a financial contribution of at least 25% of eligible costs (exclusively for investments in fixed assets) from its own or other sources, in a form free of any state aid, in accordance with the state aid rules, i.e. up to 75% of the estimated investment value can be financed.
The estimated investment value does not include VAT, except for the borrowers supplying goods or providing services exempt from VAT and/or for the borrowers that do not operate in the VAT system.
6. How is loan application submitted?
Application and related documentation shall be submitted to HBOR by the borrower via the following link.
7. Is the interest rate charged under this Programme fixed?
The interest rate charged on the part of loan principal from the ERDF funds is 0.00% p.a., fixed, and the interest rate charged on the part of loan principal from HBOR funds is fixed and is determined separately for each individual loan on the basis of risk assessment.
8. Are the loan application processing fee and commitment fee charged?
Neither loan application processing fee nor commitment fee is charged, whereas other fees in accordance with the Ordinance on Fees for HBOR Services valid on the day of calculation are charged on the part of loan financed from HBOR’s funds. Other fees are not charged on the part of loan financed from the ERDF funds.
9. What are the loan disbursement period and the loan disbursement manner?
Generally, disbursement period is up to 12 months; whereas, depending on the purpose and dynamics of investment, it is also possible to approve a longer period of loan disbursement. Part of the loan amount intended for the financing of fixed assets is disbursed to the account of the seller / supplier / contractor based on the documentation providing evidence of loan utilisation for earmarked purposes, whereas part of the loan amount intended for the financing of working capital can be disbursed to the account of the borrower with obligatory justification by documentation evidencing loan utilisation for earmarked purposes.
10. What are the loan repayment period and the loan repayment manner?
Repayment period is, depending on the purpose and structure of investment, up to 15 years, including a grace period of up to 3 years, and the manner of loan repayment is generally in equal monthly, three-monthly or semi-annual instalments.
11. How are collateral instruments determined?
Collateral instruments are determined in accordance with HBOR’s internal documents (e.g. bills of exchange, debentures, blank debentures, pledge of property with insurance policy for the property endorsed in favour of HBOR, business shares insurance, bank guarantees and other security instruments customary in banking operations) and the risk assessment of the investment and the borrower.
12. Is the construction of a commercial building considered eligible for financing?
Such a project can be financed.
13. Can the subject matter of an investment be investment in renewable energy sources?
In accordance with item 3 of the Loan Programme, investment in renewable energy sources is eligible if it is related to the initial funding referred to in Article 2 item 49 of Regulation (EU) No. 651/2014:
„initial investment” means:
(a) an investment in tangible and intangible assets related to the setting-up of a new establishment, extension of the capacity of an existing establishment, diversification of the output of an establishment into products not previously produced in the establishment or a fundamental change in the overall production process of an existing establishment; or
(b) an acquisition of assets belonging to an establishment that has closed or would have closed had it not been purchased, and is bought by an investor unrelated to the seller and excludes sole acquisition of the shares of an undertaking.
14. Is it acceptable to invest in the extension of premises related to production, for which a contract for the procurement of works had been signed before the loan application was submitted, but the contractor was not introduced to the work, works on the construction site were not started, and the construction log was not started?
If the contract for the procurement of works had been signed before the loan application was submitted or the investment announced, the investment would not be eligible.
15. Is it necessary to submit a statement of an expert witness for each individual item of investment, i.e. for each machine separately, or is it acceptable to list all investment items that belong to Industry 4.0 in one statement, and in another statement the items that fall under digitalisation?
One statement from an expert witness is sufficient for the entire investment.
16. Must the activity from the area of manufacturing (Section C) be the main (predominant) activity of the borrower or is it sufficient that it is one of the activities for which the borrower is registered?
One of the activities for which the business entity is registered must be from Section C - Manufacturing industry.