HBOR Announces Lending Program for Private Renters in the Second Half of the Year

The Croatian Bank for Reconstruction and Development (HBOR) expects that the lending program for registered private accommodation renters will be available in the second half of this year, continuing favorable lending to the tourism sector, for which they approved more than 630 million kuna in 2017.

The lending program for private accommodation is being prepared by HBOR in collaboration with the Ministry of Tourism and commercial banks, and earlier this month, Minister of Tourism Gari Cappelli announced that these loans will be for providers of household tourist accommodation, who will be able to obtain a maximum of around 50 thousand euros with a repayment period of ten years, with a grace period and favorable interest rates of 2 to 3 percent.

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Although HBOR does not disclose such details, they emphasize that the goal of such lending is to equalize quality and provide better service in private accommodation, and that under favorable conditions, it will finance the arrangement, adaptation, reconstruction, and/or equipping of facilities, construction and equipping of new indoor or outdoor pools, as well as the necessary infrastructure for cycling tourism, sports, and recreation, and the development and improvement of other additional facilities that contribute to higher occupancy and extending the season in that accommodation.

“The main goal of this program will be to increase the quality of private accommodation, and it will not finance the construction of new or the increase of existing accommodation capacities. Loans will be approved through commercial banks and will be intended for individuals-citizens who are renters with a decision on approval for providing household services, and the exact details and procedures are still being determined,” they emphasize for Hina from HBOR.

Extension of the tourist season is the goal of lending

They expect that funds under this program will be available to users in the second half of the year, or, as they say, in time for the preparation of facilities for the next tourist season, 2019.

In addition to preparing this program, HBOR notes that for several years they have been financing investments in tourism for companies, craftsmen, family farms, and institutions with favorable funds.

“The purpose of these loans is to extend the tourist season, and it usually involves investments in improving and expanding accommodation capacities, introducing new services and facilities. Tourism companies increasingly recognize the advantages of using non-repayable EU funds to co-finance projects whose financial structure can also be closed with favorable HBOR loan programs,” they convey from the bank.

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They also report that since 2012, when a series of changes to HBOR’s lending programs related to extending repayment periods, grace periods, and lowering interest rates came into effect, they have supported almost 1,300 projects in tourism, with an amount of nearly 8.3 billion kuna.

The largest number of supported projects was in the segment of improving or constructing accommodation capacities and the activities of preparing and serving food and beverages.

“In 2017, HBOR approved more than 630 million kuna for 249 projects in tourism. More than 85 percent of the loan amounts were approved for investments in the Adriatic region, with the most or nearly 280 million kuna for the area of Split-Dalmatia County,” they reveal from HBOR.

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Last year, they continued with the implementation of favorable lending programs for investments in the tourism sector, and the duration of the interest rate reduction measure was extended by one percentage point, among other things, for investments in tourism, which means that interest rates for tourism projects ranged from 2 to 3 percent, depending on business performance and the area of investment.

Repayment periods for investment loans are tailored to the tourism sector and amount to up to 17 years, with the possibility of granting a grace period of up to 4 years, and all those who were approved a loan by HBOR in 2017 paid lower fees for processing loan applications, from 0.5 percent, while previously it was 0.8 percent.

Loans for preparing the tourist season

“Under most programs that promote tourism, it is possible to finance up to 75 percent of the estimated value of the investment without VAT; however, small hoteliers, who do not need loan amounts greater than 700 thousand kuna, often use loans under programs intended for special target groups – beginners, youth, and women – under which it is possible to finance up to 100 percent of the estimated value of the investment without VAT for equally long repayment periods,” they state from HBOR.

However, the largest number of so-called smaller tourism projects in 2017 was supported through framework loans to commercial banks and leasing companies, and this method of financing, as assessed by HBOR, is very well accepted by users due to the speed and simplicity of processing.

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In this way, a total of 164 projects were supported during 2017, with an amount exceeding 124 million kuna.

HBOR also reminds that in addition to investment loans, the tourism sector has access to programs for financing the preparation of the tourist season, i.e., the procurement of food, beverages, small inventory, current maintenance costs, payroll costs, utility costs, and similar expenses, and these funds are approved with an interest rate of currently 3.4 percent and can be used from December 15 to June 30, with repayment in two installments due after the season, in October and November.