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^*
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: minimum loan amount is EUR 30,000.

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
ON DIRECTLY APPROVED LOANS To ULRGs and institutions and agencies majority-owned by them and other public sector entities under 100% guarantee of the Republic of Croatia or ULRGs: 2.40% P.A., FIXED To borrowers classified to special areas of the Republic of Croatia* 2.50 %p.a., fixed To other borrowers
ON DIRECTLY APPROVED LOANS to other borrowers: 2% p.a., fixed To all borrowers that invest in the recovery from the consequences of earthquake and economic development of Sisak-Moslavina County 3.05% p.a., fixed To borrowers classified to special areas of the Republic of Croatia* 3.30% p.a., fixed Other public sector borrowers
ON LOANS APPROVED THROUGH COMMERCIAL BANKS: 2% p.a., fixed To borrowers that invest in the recovery from the consequences of earthquake and economic development of Sisak-Moslavina County To other borrowers: For loans in the amount less that EUR 1 million: interest rate for a borrower cannot be higher than 2.50% p.a., fixed For loans in the amount of EUR 1 million and more: the bank determines interest rate on its own.

Interest Rate

ON DIRECTLY APPROVED LOANS
To ULRGs and institutions and agencies majority-owned by them and other public sector entities under 100% guarantee of the Republic of Croatia or ULRGs:

2.40% P.A., FIXED

To borrowers classified to special areas of the Republic of Croatia*

2.50 %p.a., fixed

To other borrowers

ON DIRECTLY APPROVED LOANS
to other borrowers:

2% p.a., fixed

To all borrowers that invest in the recovery from the consequences of earthquake and economic development of Sisak-Moslavina County

3.05% p.a., fixed

To borrowers classified to special areas of the Republic of Croatia*

3.30% p.a., fixed

Other public sector borrowers

ON LOANS APPROVED THROUGH COMMERCIAL BANKS:

2% p.a., fixed

To borrowers that invest in the recovery from the consequences of earthquake and economic development of Sisak-Moslavina County

To other borrowers:

For loans in the amount less that EUR 1 million: interest rate for a borrower cannot be higher than 2.50% p.a., fixed
For loans in the amount of EUR 1 million and more: the bank determines interest rate on its own.

In certain cases, interest rate can be even higher as follows:

To borrowers that perform business activity and cannot obtain state aid and/or de minims aid, effective interest rate (EIR)** cannot be lower than the reference interest rate for a single borrower (RIR)***, all in accordance with the regulations on the award of state aid
To borrowers with loans in the amount of EUR 1 million and above, HBOR determines the level of interest rate for each individual loan

*Special areas of the Republic of Croatia are defined in the General Eligibility Criteria, which are a constituent part of this loan programme.
**Effective interest rate (EIR) is an interest rate that shows total costs of a loan in accordance with the valid Decision on Effective Interest Rate of the Croatian National Bank.
***Reference interest rate (RIR) is the base rate (calculated and published by the European Commission), increased by a certain number of basis points (margin) that depend on the client’s rating (credit rating) and the assessment of collaterals, in accordance with the Communication from the Commission on the revision of the method of determining reference and discount rates (OJ C 14, 19.1.2008). It is applied for the calculation of aid in loans approved with promotional interest rates. The range of valid RIR is available in the Information on Base and Discount Rates and Reference Rates.

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: 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:

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*
For loans intended for the recovery from the consequences of earthquake and for the economic development of Sisak-Moslavina County, it is allowed to make a refund for borrowers’ investments made after the earthquake until the submission of loan application (for such a refund, commercial banks are not obliged to notify HBOR in advance).

*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

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/
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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.