HAMAG BICRO has received a large amount of applications from Croatian business owners across the spectrum for loans. These enterprises have made their applications due to the fact that they have been financially hit by the coronavirus pandemic and the economic crisis that has emerged from that.
As Novac writes on the 5th of May, 2020, the Croatian Employers’ Association and the Croatian Agency for Small Business, Innovation and Investment organised a webinar with the aim of clarifying the measures in place to preserve the liquidity of small and medium Croatian companies.
Croatia’s business owners have now been being offered various working capital loans for over a month, these include the ESIF Mirko working capital loan, the COVID 19 working capital loan and the micro working capital loan for rural development.
Representatives of HAMAG BICRO, Iva Debanic and Josipa Kutle Stepancic, explained the dynamics of receiving and processing these applications:
”To date, a total of 2237 applications have been received by HAMG BICRO for these three loans and 445 have been processed with an average approval rate of 70 percent. Looking at the figures, it’s important to understand that the higher pass rate of applications for the COVID loan is associated with a larger number of eligible activities, ie, applications from ineligible activities created more negative ratings for other loans. When we talk about these loans, it’s important to know that the aid currently being granted is de minimis aid. Aware that the prescribed limit of a maximum of 200,000 euros per business owner over a three-year period is a restriction for some, HAMAG BICRO is in the process of drafting a new set of rules on state aid that is better adapted to the current market situation and the effects of the coronavirus pandemic on the economy.
In several loan applications, there were requests for the financing of fixed assets (investments in equipment or adaptations), but this is not allowed via these financial instruments. It’s also not possible to refinance existing liabilities, such as closing leases, existing loans and such things. For COVID loans, VAT is an eligible cost, while for the remaining two micro loans, it isn’t (for PRR loans, the cost is eligible if the applicant is not in the VAT system).
In the case of the ESIF microloan and the microloan for rural development, a significant difference in relation to the COVID loan is the ineligibility of medium-sized entities. Furthermore, the grace period, which was previously up to 6 months for the ESIF microloan, has been extended to 12 months. Upon approval, the funds are paid into a special purpose account and used for a period of 3 months for micro loans or up to 6 months for COVID loans. For all of these loans, it should be noted that when they’re approved, the average quarterly or six-month amount of regular (working) expenses is analysed, and the loan amount is then approved accordingly.
With the funds for micro loans, it’s possible to settle obligations that are up to 3 months old from the date of the receipt of the loan application, while with COVID loans, all costs incurred throughout 2020 are eligible. However, it may not be used to pay bills already paid or for investments used for private purposes.
In recent days, a large number of inquiries from Croatian business owners have arrived at both HUP and HAMAG BICRO’s doors regarding the new obligation to register on the FINA portal, so, the most common doubts and questions were clarified:
– All applications for HAMAG BICRO loans must come directly to them together with all of the prescribed and required documentation
– Registration on the FINA portal is mandatory but represents an additional step and cannot replace direct application
– Registration on the FINA portal replaces the need to submit a HROK credit report because FINA submits this information on the business owner, which includes the Croatian National Bank’s assessment on any existing debts
– When assessing the acceptability of a loan application, the business plan and the accompanying financial indicators of the business in question are fuly taken into account, and not only the ”COVID score” created on the FINA portal
– The FINA portal does not allow for the reporting/registering and proving of the loss of future income (in the second quarter of 2020) but this does not affect the passability of the request because the same is proven directly in the report to HAMAG BICRO
After approving the funds, the user/business owner must then open a special purpose account. All payments must be made directly from that account to the supplier’s account and must never be paid in cash. In the case of the need to pay salaries, on the day of the payment of salaries, part of the money may be transferred to a basic account and later on through statements, the business owner can prove to HAMAG BICRO that the funds were indeed spent for the intended purpose (on the payment of employee salaries).
This business plan defines the regular monthly expenses and is therefore classed as an eligible expense. What is important to note is that if the monthly agreed payment is for rent, you cannot pay it outside the agreed terms of use (for example, the annual rent cannot be paid). However, if the business owner has a previously agreed annual payment of rent that is due at the time of using the loan, then the same is acceptable.
In the case of an ESFI loan, when paying a VAT invoice, the company pays the VAT cost from the regular invoice and then pays the full amount of the invoice to the supplier.
Financing the salaries of the beneficiaries of the Croatian Employment Service’s measure for the preservation of jobs doesn’t pose an obstacle for the beneficiaries of HAMAG BICRO loans to finance everything above the amount of received support (if the employee’s salary is higher than 4000 kuna) or to finance the salaries of employees not covered by the aforementioned institution’s measures in order to avoid double financing.
Regarding the dynamics of the processing of these requests, it’s worth understanding that more requests were received in just one single month than were received during the whole of 2019.
At the beginning, a large number of requests were received without any supporting documentation, which was tolerated at the time owing to panic and a general lack of understanding, but this additionally burdens the already stretched evaluation resources which are working to resolve backlogs.
In order to work as efficiently as possible, the appeal is for the complete submission of all required documentation because then the processing procedure is faster and more smooth.
The materials from today’s webinar will be published on the HUP website, and in a few days, a consolidated document with the received questions and answers will be published so that as many business owners as possible receive the necessary clarifications to their questions and confusion.
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