Recovery and Development Investment Program – Another Try Towards Encouraging Economic Development

April 06, 2022

Recovery and Development Investment Program – Another Try Towards Encouraging Economic Development

April 06, 2022

Miloš Velimirović

Miloš Velimirović

Partner

Andja Nikolić

Andja Nikolić

Senior Associate

The Government of the Republic of Serbia enacted the Decree on Establishing the Investment Program “Recovery and Development” (the “Program”) to establish a new credit line for the allocation of favourable credit funds to entities for the implementation of new investments, which will accelerate the recovery and growth of economic activity in the Republic of Serbia in difficult economic conditions caused by the SARS-CoV-2 virus.

Funds for the implementation of the Program are provided from:

  1. the credit line of the European Investment Bank (the “EIB”) of EUR 90,000,000.00 under the financial agreement on faster recovery of small and medium-sized enterprises (SMEs) and mid-caps from COVID-19 signed between the EIB and the Republic of Serbia (the „Financial Agreement“), and
  2. the Development Fund of the Republic of Serbia (the “Fund”) of RSD 100,000,000.00 (approx. EUR 850,000).

The request may be submitted until the funds from the Program are spent but no later than 30 June 2022.

 

Who qualifies?

Each applicant must meet the following conditions:

  1. to have less than 250 employees (full-time), or to be a legal entity with a medium market capitalization (“MidCap”), defined as companies with a minimum of 250 employees and less than 3,000 employees (full-time),
  2. privately or cooperatively owned and registered with the Business Registers Agency and other relevant registers,
  3. perform and have registered as a predominant activity one of the activities from the list of activities provided in the Program.

 

How can the funds be used?

Legal entities are entitled to apply for the funds under the Program for the following purposes:

  • purchase, construction, extension, reconstruction, adaptation, rehabilitation, investment maintenance of space for performing business activities, or storage space and accommodation facilities in tourism, except for the purchase of land;
  • purchase of new or used (up to six years old) equipment for performing business activities, including tools and delivery vehicles as well as other means of transport, except for light commercial vehicles, category N1;
  • purchase of computer equipment;
  • intangible assets (software procurement).

Assets acquired through investment must be new, except when the assets are acquired by micro, small and medium-sized legal entities.

 

Loan Conditions

The funds may be granted under the following conditions:

  1. the maximum loan amount is RSD 290,000,000.00 (approx. EUR 2.465.000) whereas the minimum amount is RSD 1,000,000.00 (approx. EUR 8,500), whereas the amount of the approved loan may not exceed 75% of the eligible costs from the estimated value of the investment;
  2. duration of the repayment period may be:
  • 12 years including a grace period of up to 2 years and the interest rate of 1.5% per annum for all collateral with the application of the currency clause, or
  • 6 years including a grace period of up to 1 year and the interest rate of 0.9% per annum for all collateral with the application of the currency clause.
  • intercalary interest is calculated and paid monthly during the grace period.

Security instruments include:

  1. guarantee or endorsed bills of exchange of a commercial bank; and or
  2. first-class mortgage on real estate (the amount of the approved loan will depend on the market value and the type of the mortgaged real estate), and or
  3. pledges on existing production equipment and other movable property (for loans with 6 years repayment period).

Additionally, applicants must provide a solo promissory note, as well as establish a pledge/mortgage over the subject of the investment.

Supervision and control of the intended use of funds are performed by the Fund, and users are obliged to enable the Fund with control and insight into the documentation necessary for supervision.

In order to allocate the funds reasonably, the Funds requires applicants to submit a statement whether and in what amount they have already received state aid / de minimis aid or are they in the process of obtaining it for the same eligible costs.

 

 

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 Nikolić, Senior Associate
andja.nikolic@sog.rs

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