January 19, 2023 - The Croatian Bank for Reconstruction and Development (HBOR) is bringing more favourable investment financing conditions for everyone, but green and digital transition projects will benefit the most.

As Poslovni writes, more favourable financing conditions based on subsidized interest are available to a large number of entrepreneurs, with the condition that their projects do not produce harmful effects on the environment, which will be evaluated in HBOR. All small, medium, and large entrepreneurs, as well as the public sector, are acceptable candidates.

Up to one million euros

After the HBOR signed agreements with the 15 largest banks in the Republic of Croatia on cooperation in subsidizing interest from the National Recovery and Resilience Plan (NPOO) funds, all potential beneficiaries were invited to contact them as soon as possible. In cooperation with the Government, 80 million euros have been set aside for the program from the NPOO funds. According to the head of the Board of HBOR, Hrvoje Čuvalo, with the amount of 80 million euros, investments of 400 million euros can be encouraged.

"I invite all entrepreneurs to report to HBOR or commercial banks as soon as possible to gather all the necessary information and start implementing it as soon as possible. All projects planned for EU financing must meet the criterion of environmental acceptability, and this evaluation will be done centrally from one place, in the HBOR, which enables uniform evaluation criteria for entrepreneurs and less administrative work for commercial banks," said Čuvalo.

The most significant benefit of HBOR's program are reduced interest rates in the range of 50 to 75% compared to the initial market interest rates, depending on the type and purpose of the investment, but it is significant that all the big commercial banks are gathered because they responded to HBOR's initiative. This "proves a common willingness to contribute to the growth and development of the economy."

At the Government's instigation, HBOR designed a product that can bring entrepreneurs the creation of their investments with the most favourable interest rates. At the EC's request, the environmental acceptability of the projects was also included in the formula as a kind of ultimate goal of both the Republic of Croatia and the EU, and the Commission accepted such a program.

The subsidies can be granted through loans for investments in fixed assets - from business start-ups to modernization and capacity expansion; the amount per individual loan is limited to half a million euros for small and medium-sized entrepreneurs and one million euros for other entities.

In a situation of continuous growth of interest rates, the mentioned program presents concrete support in the realization of investment projects with credit funds, so it is expected that the planned amount of subsidies will be fully realized during 2023 and 2024. Subsidies of up to 65% can be realized for investments in particular areas of the Republic of Croatia, as well as in research, development, and innovation, and for public sector investments to mitigate the consequences of earthquakes.

For other investments in competitiveness and resilience, the subsidy is up to 50%. The advantage of the program is the environmental acceptability of the investment, so due to the new Regulation on EU taxonomy, everyone will follow suit on this plan because economic activities must significantly contribute to one of the six environmental protection goals and not considerably harm any of the others.

Risk assessment

Interest rates are becoming the most interesting issue. According to PBZ Management Board member Vedrana Jelušić Kašić, each bank will decide independently, depending on the risk rates of the projects.

"There is competition for the client to choose which bank is the most competitive, and the client receives a subsidy of up to 75% of interest or up to a maximum of 3% points. Depending on the risk rate of the project, the interest will also vary, and we believe that as many clients as possible will come forward and that everyone will be able to receive the highest level of subsidies", said Jelušić Kašić.

For more, make sure to check out our dedicated Business section.