Next week, the deputies will have before them the Bill on establishing a guarantee scheme as a measure of support to the economy for mitigating the consequences of the pandemic, through which the state will guarantee the return of commercial loans for liquidity or working capital. Applying this regulation would make it easier for small and medium enterprises to access the necessary funds, but also reduce the cost of borrowing from commercial banks.
The explanation of the law states that the guarantee scheme is “a necessary continuation of the undertaken measures to support the economy”, and that the guarantee issued by the Republic of Serbia in favor of banks will be “unconditional, without the right to object and collectable at the first call”.
In order for the banks to be insured, Serbia undertakes to provide funds in the budget for that purpose, and the maximum amount of guarantee at the level of the insured portfolio will be 480 million euros.
Individual guarantees will be issued according to the portfolio of each individual bank, with a coverage rate of 80 percent and a maximum guarantee rate of 30 percent.
At the beginning of the loan repayment, the individual guarantee will be successively and automatically reduced, in proportion to the reduction of the principal amount.
Interest rates will be regulated by banks in accordance with their credit policy, in the amount not exceeding the one-month belibor rate, increased by 2.50 percent for loans approved in dinars, and in the amount not exceeding the three-month Euribor rate increased by 3 percent, for loans in euros.
The total fee per loan may not exceed 0.5 percent of the loan amount, the loan security instrument is submitted by at least the bills of exchange of the beneficiary and the majority owner (equal to or greater than 25 percent), the borrower cannot pay dividends or repay the founder’s loan in the first year after the conclusion of the loan agreement, and the borrower will not make temporary repayment of some other and existing loans with banks during the grace period.
The amount under an individual guarantee will not be renewable, due to the efficiency of the guarantee mechanism and to reduce the possibility of guarantees covering revolving loans and short-term loans, with a repayment period of up to 12 months.
The purpose of the loan is exclusively for financing liquidity and working capital, the possibility of refinancing and temporary repayment of overdue installments of existing loans is excluded, as well as refinancing of loans with other banks.
The amount of loan realization by banks is regulated by the Bill and the accompanying regulation, up to amounts of up to 2 billion euros.
Who can use the loans guaranteed by the state?
* an enterprise with its registered office in the Republic of Serbia, including agricultural holdings, which is registered in the APR and classified as an entrepreneur, micro, small or medium-sized company, in accordance with the Law on Accounting,
* person who is not registered in the APR, but has officially published financial statements and is classified as an entrepreneur, or micro, small and medium enterprise, in accordance with the Law on Accounting,
* a person to whom a new loan has been approved in accordance with the bank’s credit policy, or the renewal of an existing loan, for which the Republic of Serbia may guarantee to the bank, in accordance with the regulation.
* the guarantee scheme will not be able to be used by companies that were in difficulties in 2019, which have due and unpaid tax obligations, in which the republic, autonomous province or local self-government has a share in the ownership of over 50 percent.
In addition, the new measures will exclude users whose debts were in the status of outstanding liabilities under NBS regulations or according to which the bank undertook restructuring measures in the period of 12 months before the end of February 2020, as well as companies subject to agreed financial restructuring, bankruptcy or liquidation.
Serbia will issue an Individual Guarantee only if the loan is issued in the exchange rate no later than July 31, 2021, that the loan repayment period is up to 36 months (from the release into the exchange rate), and this period includes a grace period of nine to 12 months except in cases of application of the moratorium specified in the regulations of the NBS due to the mitigation of the pandemic.
The loan agreement must be concluded by June 30, 2021 and put into effect by July 31, 2021, Nova Ekonomija reports.
