Break Down the Project to Obtain More Support and Funding from the EU

Once, a businessman told me that regardless of who sits at the table, someone always has to pay the bill. You just need to make sure that you are not that person. Let it preferably be the European Union. In the case of drawing funds from EU funds, the perception that this is money that grows on trees and just needs to be picked is completely wrong. Namely, although this money is primarily intended for the development of entrepreneurship, there are strict rules that must be followed. Otherwise, that bill, even if you manage to obtain an unprecedented amount of money through combinations, could be paid by the entrepreneur themselves. A well-designed business and financial plan, when you want to draw funds from EU funds, should aim for the successful realization of the project, not just the mere accumulation of cheap money that will end up in a bottomless pit.

– The foundation of success is taking responsibility. By this, I do not mean the responsibility of the consultant you pay to write plans for you, but the entrepreneur personally, who must show initiative and knowledge and once they pass the first tenders, must know how to write applications and plans themselves – says Ana Mandac, Deputy Minister of Entrepreneurship in the technical government.

As a rule, tenders are designed so that the same project cannot apply for multiple tenders simultaneously. In some tenders, this is explicitly stated. If such an application is even possible, it will be checked whether the user has already received certain support for the same activities. Within three years, an entrepreneur must not receive more than one and a half million kuna.

Instructions for Cumulativeness

The rule is quite clear: double financing and the accumulation (adding) of support above the maximum limits in investment areas where they are set is prohibited. Now that we know what should not be done, here’s how to smartly combine and utilize available support and funds from the EU.

– It is common for users, in order to achieve the highest overall support rate and the most favorable conditions, to break down their entire project idea into several smaller project applications which they then submit to multiple separate tenders. Not only does this approach increase the overall chances of receiving support, but in some cases, they can also achieve more favorable conditions compared to applying for a complete project in just one tender. In such cases, users are advised to further consider the profitability regarding the increase in administrative costs of preparing and implementing projects to thoroughly, if necessary with the help of expert advisors, check compliance with the aforementioned principles – says Ana Odak from the Ministry of Regional Development and EU Funds.

Thus, the first item in combining is a good business plan, and then the engagement of a consultant. The preparation of a plan typically costs between three and a half to 10 thousand kuna. You do not have to spend much on a consultant, and once you get the hang of it, you can write the plan yourself. In this sense, there are institutions that can help, so the service of a consultant and business plan preparation costs less. Assistance can be sought from the offices of the Development Agency, the Croatian Chamber of Trades and Crafts, and the Croatian Chamber of Commerce. Soon, similar services will also be provided by the regional offices of HAMAG-BICRO. This agency is decentralizing and, according to announcements, will have offices in every city in Croatia. The next step is to look at every segment of the general plan.

– You write the project as a whole, and then you look at what tenders exist for that project. Namely, when projects are broken down, for example, if someone who has made a hostel wants to build a pool, but also invest in infrastructure, for example, build new bathrooms, they have several tenders available to apply for based on those grounds. And not all of these tenders fall under the jurisdiction of the same ministry – explains Mandac.

Examples of Combinatorics

This path was taken by Ivana Holjevac, owner of the Sveti Rok hostel in Lovinac. By combining in tenders, she managed to obtain money for almost every item, from renovating business premises to building a new pool.

– The first tender we applied for was indeed special. Namely, we found out it was open only three or four days before its closing. It was a crazy three days during which we gathered the necessary documentation. We applied for a tender for the revitalization of business premises in state ownership that are in private lease – reveals Holjevac, who successfully obtained 50 thousand kuna in that tender.

Since it is a building of 1200 square meters, that was not a significant amount, but every bit of help was welcome. Through HAMAG and as part of the ‘Women Entrepreneur’ program, she managed to obtain 120 thousand kuna, and here the combinatorics came to the fore.

– When you apply for such tenders, for such loans you have, I would say, a table according to which you receive points, and their sum improves the chances of passing the tender. So it was very important for our hostel that I am a woman, that I am a young entrepreneur, I am 36 years old, that the hostel opens in a rural area, and the number of employees was also important – says Ivana.

The Ministry of Entrepreneurship has conducted, for example, five major tenders – Competence, Innovations, Development in Tourism, Information and Communication Technologies, and E-Impulse – through which many have achieved co-financing in a similar way. All these tenders have percentages by which projects are co-financed, so this is also combined from the perspective of those who aspire to European money.

In the Competence tender, projects were co-financed at a rate of 35 to 45 percent. The amounts of projects that could be co-financed within this tender ranged from 300 thousand to 30 million kuna. Thus, that 45 percent could also be 30 million kuna. However, a problem arose here. For micro, small, and medium-sized entrepreneurs, that threshold was too high, meaning they did not have such expensive projects. Therefore, the Ministry decided to create a tender according to which entrepreneurs’ projects do not have to be so ambitious and amount to several million kuna, but can be, for domestic conditions, more realistic, several tens of thousands of kuna. Thus, E-Impulse was born.

– Micro-entrepreneurs co-finance their projects in this tender at a rate of 85 percent, and small ones up to 65 percent. These are amounts from 30 thousand kuna to 300 thousand kuna – emphasizes Mandac.

So far, about a hundred entrepreneurs have applied for this tender, and applications are still being collected. All those who have applied, depending on their activity, can also apply for tenders from some other ministries. Thus, Ivana Holjevac, the hostel owner, in addition to E-Impulse, applied for tenders announced by the Ministry of Tourism for the construction of the pool. Besides verbally, in conversations with consultants, she found information on where to apply on the Ministry’s websites.

– We closely monitor all tenders. We applied for the one from the Ministry of Tourism, for ‘competitiveness development’. Our project was ‘worth’ 300 thousand kuna, and we managed to obtain 50 thousand. We need this to renovate the bathrooms for our guests – says Ivana.

EU Pays Salaries

At HAMAG, you get information on which is the most favorable loan for your project. Its employees, besides monitoring the implementation of the project, have the job of keeping interest rates at 0.5 percent. Besides loans, even the salaries of employees can be co-financed. For the training of young craftsmen, the Ministry of Entrepreneurship has secured 23 million kuna. Additionally, HAMAG has also found money in the EU for the salaries of new employees, as they say, their workload has increased. It is possible, therefore, to cover even the salaries of workers with EU money, and then also with state incentives for employment, depending on which category of people you are hiring. This especially comes to light for those who use HZZ support for self-employment.

– Based on these funds, the Ziher craft was established, whose owner, a plumber, spent three months as an unemployed person to obtain funds for self-employment, established a craft, started a business, and even employed his son – recalls another example of combining Ana Mandac.