The outbreak of the Coronavirus and the introduction of the state of emergency for its suppression impacted the private sector of our country the most. In order to mitigate crisis, the Government of the Republic of Serbia adopted a package of measures related to the direct aid to businessmen and employees. One of these measures is the adoption of the Program of Financial Support for companies directly under impact of the economic situation caused by the Covid-19 pandemic. The program includes financial support or support of liquidity for companies in conditions of aggravated operations. The basic goals of the Program are securing liquidity funds to companies for procuring current assets as well as maintaining current liquidity for the purpose of regular settlement of obligations towards employees, business partners and the Government. The Program is implemented by the Government of the Republic of Serbia in cooperation with the Development Fund of the Republic of Serbia, and for this purpose, funds in the amount of 24.000.000.000,00 dinars have been allocated. 

Who has the right to use funds from this Program

The right to use the funds is given to:

• Entrepreneurs (no limitations), 
• Collectives (also, no limitations), 
• Micro, small and medium companies that have major private or collective ownership and that perform production, provide services, are involved in trade or agriculture.

Funds cannot be used for certain specific activities. These are:

• Organizing games of chance, lottery and similar activities,
• Trade of oil and oil products,
• Trade and production of any product or activity that is considered prohibited in line with domestic or international conventions.

Terms of funds utilization

Entrepreneurs, collectives, micro, small and medium companies (as classified by the Law on Accounting) are entitled to submit requests for loans as envisaged by the Program of Financial Support, provided that these subjects submit official registered financial statements for the last two years. The condition of submitting financial statements shall not refer to entrepreneurs that do not have this obligation. In order to approve the loan the financial statements must present:

• net loss for one of the last two years, and 
• achieved business profit in the last two years. 

Also, another condition prescribes that the applicant 

• is not in poor financial position (interpretation of this term will be interesting) 
• no bankruptcy proceedings have been initiated.

Conditions of the loan

– repayment period of 36 months, including 12 month grace period, total duration of loan is up to 12 months of grace period and up to 24 months of repayment,

– interest rate 1% on annual level,

– loans approved and repaid in dinars,

– minimum amount of loan for one loan user is 

1.000.000,00 dinars (user + its related parties) for companies, that is 

200.000,00 dinars, for entrepreneurs, collectives and registered companies,

– maximum loan amount for one user may be:

1) entrepreneurs and micro companies up to 10.000.000,00 RSD,

2) small companies up to 40.000.000,00 RSD,

3) medium companies up to 120.000.000,00 RSD

– loan repayment in monthly installments,

– interest is calculated in the grace period and is added to the main debt,

– in order for the company to qualify for the loan in the period from 15 March 2020 until the expiration of three months after the disbursement of funds, such company may not reduce the number of employees by more than 10%, not including employees that concluded a part-time employment contract with the private company prior to 15 March 2020 for the period ending in such timeframe,

– the instruments of loan repayment are:

• bill of exchange and draft authorization of the guarantor or person assuming the debt,
• mortgage over real estate with market value 1:1 related to the approved loan,
• lien on equipment or movables with market value 1:1 related to the approved loan, 
• bill of exchange and draft authorization of the founder or shareholder of the debtor
• bill of exchange and draft authorization of the debtor must be delivered with one of the stated securities.

Which securities must the loan users submit

If the loan amount is over 1.000.000,00 dinars, the basic securities are bills of exchange of loan users and personal bills of exchange of founders.

• For loan amount of 2.000.000,00 dinars, the basic securities are bills of exchange of loan users, personal bills of exchange of founders and a pledge of a natural person being a permanent employee.
• For loan amount of 10.000.000,00 dinars, the basic securities are bills of exchange of loan users, personal bills of exchange of founders and a pledge of a related company.
• For loan amount of 25.000.000,00 dinars, the basic securities are bills of exchange of loan users, personal bills of exchange of founders and a pledge of a solvent company not being a related company of the loan user.
• For loan amount over 25.000.000,00 dinars, the basic securities are bills of exchange of loan users, pledge over the equipment owned by the loan user or pledgor and first rate mortgage.

In case you have any questions or doubts related to the terms of loans, please contact us in the comments below.