Serbia Introduces New Rules Regarding State Aid for Maintaining Liquidity and Working Capital

August 13, 2021

Serbia Introduces New Rules Regarding State Aid for Maintaining Liquidity and Working Capital

August 13, 2021

Miloš Velimirović

Miloš Velimirović

Partner

Andja Savić

Andja Savić

Senior Associate

The Serbian parliament has enacted the Law on Establishment of Financial Support to Legal Entities for Maintaining Liquidity and Working Capital in difficult economic conditions due to Covid-19 pandemic caused by SARS-COV-2 virus (the „Law“). At least RSD 12 billion (cca. EUR 103 million) will be provided from the European Investment Bank’s credit line for the implementation of the Law.​

 

Who qualifies?

 

Each applicant must meet the following conditions:

  • to be registered as an entrepreneur, a cooperative, a micro, small and medium-sized legal entity, majority privately or cooperatively owned,
  • to perform production, trade, or agricultural activities or to provide services,
  • not undergoing insolvency, liquidation, measures of reorganisation or financial restructuring,
  • submitted a loan application to the Development Fund of the Republic of Serbia (the „Fund“) by 10 December 2020, and not obtaining a decision upon the application by 29 July 2021.

 

How can the funds be used?

 

The funds can be used for the procurement of working capital and maintaining the current liquidity of the aforementioned categories, to be able to settle its obligations in the ordinary course of business.

Funds cannot be used for (i) organizing games of chance, lotteries, and similar activities; (ii) trade in oil and oil derivatives), or (iii) production and trade of products or for activities that are prohibited.

 

Loan Conditions

 

The funds may be granted under the following conditions (different conditions apply for legal entities whose predominant business activity is tourism, hospitality, or passenger traffic):

  • the repayment period is up to 48 months, including a grace period of up to 18 months;
  • 1% of the interest rate per annum;
  • the minimum loan amount (starting from RSD 200,000 to RSD 1 million) and the maximum loan amount (from RSD 10 million to RSD 1000 million) depend on the category of an applicant; the maximum amount of the approved loan can be up to 50% of the realized business revenues according to the financial report in 2019;
  • security instruments (a mortgage, a pledge on movables, a promissory note of the applicant’s shareholder, and/or promissory note of a guarantor/assignee) depend on the amount of the loan; shareholders who are foreign citizens or companies registered abroad do not submit personal promissory notes;
  • dividend distribution is not allowed until the end of 2021 (payment in shares is allowed).

The Fund will decide upon the applications until 31 December 2021

 

Prolongation of Repayment Period

 

The Fund announced that the repayment period for debtors to whom the loan was approved in 2020, except those whose predominant business activity is tourism, hospitality, or passenger traffic, will be extended by 12 months (6 months for both grace period and the repayment period) without concluding a separate annex to the loan agreement.

All debtors who do not want to use this opportunity are obliged to submit a statement via e-mail: covid19@fondzarazvoj.rs no later than 28 August 2021, otherwise the repayment period and grace period will be automatically extended.

 

 

This text is for informational purposes only and should not be considered legal advice. Should you require any additional information, feel free to contact us.

Contact:

Miloš Velimirović, Partner
milos.velimirovic@sog.rs

Andja Savić, Senior Associate
andja.savic@sog.rs

OTHER NEWS

The New Serbian Legal Framework for Internships to Be Adopted

The New Serbian Legal Framework for Internships to Be Adopted

 At the end of 2021, a public debate was held in the National Assembly on the Draft Law on Work Practice. The Draft itself is a reaction to relatively unfavourable basic labour market indicators, which predict that young people in Serbia lag behind their peers in...

read more
NFTs in the Light of Trademark Law

NFTs in the Light of Trademark Law

 Recently, non-fungible tokens (“NFTs”) have become the subject of significant public attention, primarily due to the high amounts of money allocated for their purchase. For example, it is estimated that the worth of the global NFT market in 2021 was about 41...

read more
What Is a Data Protection Officer (DPO)?

What Is a Data Protection Officer (DPO)?

 Data Protection Officer (“DPO”) is a person overseeing a company’s data protection strategy and implementation in order to ensure compliance with General Data Protection Regulation (“GDPR”) requirements. Any company that processes or stores personal data is...

read more

Let's connect

Let us know how we can help you and your business.