HBOR Offers Entrepreneurs Loans with the Possibility of Principal Write-Off

The Croatian Bank for Reconstruction and Development (HBOR), in collaboration with the Ministry of Regional Development and European Union Funds and the Ministry of Economy, has developed a new financial instrument ‘Loans for Production Modernization‘, aimed at small and medium-sized enterprises operating in the manufacturing sector.

The aim of the new program is to encourage modernization, digitalization, and increased productivity of companies through more favorable financing conditions, with a key feature being its structure that includes a combination of loans and grants. A capital rebate, or principal write-off, which can amount to up to 50 percent of the total loan amount, is achieved upon meeting predefined criteria.

– The combination of favorable financing conditions and grants has proven to be an effective support model for key sectors of the economy, as evidenced by the strong interest from entrepreneurs in the two financial instruments we launched last year. Continuing the success of this model, we aim to enable entrepreneurs in the manufacturing sector to further modernize their operations and adapt to global standards, thereby ensuring their long-term resilience and growth – said the CEO of HBOR, Hrvoje Čuvalo.

Loans will be granted without fees for processing the loan application, for reserving funds, or for early repayment (write-off) of the loan resulting from the realization of the capital rebate. The repayment period is up to 14 years, including a grace period of up to 3 years. The minimum loan amount is 100,000 euros, while the maximum can reach 3 million euros. The loan represents a combination of funds from the European Regional Development Fund (ERDF) with a fixed interest rate of 0 percent per annum, and funds from HBOR with a fixed interest rate determined separately for each individual loan based on risk assessment. A total of 79.7 million euros is available for loan disbursement to users – of which 50 percent is from the European Regional Development Fund and 50 percent from HBOR funds.

– In this financial period, we continue to provide strong support for development projects through financial instruments, with a total value exceeding 1.2 billion euros. After securing 180 million euros for development projects in cities through the Urban Development Fund and 170 million euros for the development of sustainable tourism and improvement of the quality of tourist products and services, we are now supporting the modernization of production, i.e., the digitalization of business processes in the manufacturing industry with 80 million euros. This financing model contributes to the competitiveness of the Croatian industry and encourages new investments across Croatia – stated the Minister of Regional Development and European Union Funds, Šime Erlić.

The Ministry of Economy has so far awarded a large number of non-repayable grants to Croatian entrepreneurs for research, innovation, internationalization, and digital and green transition.

– It is particularly worth highlighting this new financial instrument that enables companies to invest in expanding production capacities, with significant benefits for investments in the digital transformation of business. This instrument provides the possibility of writing off part of the principal for achievements in the digitalization of business processes, automation, robotization, and other advanced solutions of Industry 4.0. In this way, up to half of the loan amount can be converted into grants, with simplified financing rules – stated the Minister of Economy Ante Šušnjar.