11 April 2020
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Decree regarding financial support for business entities to maintain liquidity as part of the legal framework of state aid to economy

As part of the legal framework for implementing economic support measures, Decree 05 No: 53-3117/2020-1 establishes, as an integral part of it, a Program of financial support to business entities for maintaining liquidity and working capital in aggravated economic conditions due to the pandemic caused by the virus SARS-CoV-2 (“Program“).


RSD 24 billion are earmarked for implementation of this Program, just a part of which is the legal framework. The funds for implementation of this regulation will be provided from the budget of the Republic of Serbia for 2020 under Section 21 – Ministry of Economy. Also, the funds of the Development Fund of the Republic of Serbia (“Fund“) will be used to implement the Program.


The Program specifies in detail the subject, objectives, beneficiaries and purpose of the funds, the conditions of use of the funds, the manner and the monitoring of implementation of the Program.


The objective of the Program is to provide support to business entities, in the aggravated business environment caused by the COVID-19 pandemic, for the procurement of working capital and for maintaining liquidity.


Right to use funds of this Program belongs to entrepreneurs, co-operatives, micro, small and medium-sized companies which are majority privately or by co-operatives owned. The condition that the business entities must fulfill is to perform production, service, trade and agricultural activities.


Terms for the use of funds


The loan repayment period will be up to 36 months, which includes a grace period of up to 12 months. The total loan duration is up to 12 months of grace and up to 24 months of repayment. Repayments will be made in monthly annuities.


Interest rate – 1% annually.


The main condition for the realization of these loans is the retention of the number of employees, with a tolerance of up to 10% accepted both before the date of application and during the use of the loan,  taking into account the number of employees on the day of March 16, 2020, in accordance with the report of the Central Register of Mandatory Social Security.


The minimum amount of loan that companies can raise is RSD 1,000,000, and entrepreneurs, co-operatives and business entities registered in the relevant register, RSD 200,000. As a maximum loan amount, entrepreneurs and micro-legal entities can raise up to RSD 10,000,000, small legal entities up to RSD 40,000,000, and medium-sized legal entities up to RSD 120,000,000. Minimum and maximum amounts are stipulated for one loan beneficiary with the affiliated persons.


Business entities must submit official regular financial reports for the previous two years. This requirement does not apply to entrepreneurs who are not required to submit financial reports. The requirement for co-operatives is that the co-operative has harmonized its internal acts, organs and operations with the Co-operatives Act and has been subjected to co-operative audit in the last two years.


In order to be beneficiaries, the business entities must not be subjected to bankruptcy proceedings, liquidation proceeding, nor may measures of a pre-prepared reorganization plan or financial restructuring be conducted on them. The loan may also be granted if in the official financial reports of a business entity for one of the last two years, a net loss is reported but a profit has been achieved.


Instruments for securing the proper repayment of the loan


  • promissory note and promissory note authorization of the guarantor/accessor to the debt (if there is a guarantee/access to the debt of another business entity) and/or
  • real estate mortgages whose market value is 1: 1 in relation to the loan amount and/or
  • a pledge on equipment /movables whose market value is 1: 1 in relation to the loan amount and/or
  • promissory note and promissory note authorization of the debtor’s founder/shareholder;
  • The promissory note and the promissory note authorization must be provided with one of the above stated means of security.


The specific security which the loan beneficiaries must provide depends on the amount of funds and is in detail classified by the Program according to this criterion.


Implementation of the Program


The receipt of the requests shall be conducted until the funds of the Program are spent, and no later than December 10, 2020. The Board of Directors of the Fund will take decisions about the received requests no later than December 31, 2020, up to the amount of currently available funds for the implementation of this Program.


The deadline for the approved funds realization under this Program and the decisions of the Fund’s Board of Directors is March 31, 2021.


Upon the adoption of the Program, the Ministry of Economy will sign a commission agreement with the Fund regarding the implementation of this Program, which will transfer to the Fund the obligation to collect and process the requests of the business entities for the loan, the obligation to conclude the loan agreement with the business entities, as well  to control the earmarked use of funds.


In conducting the control, technical support to the Fund is provided by the Insurance and Financing of Export Agency of the Republic of Serbia a.d. Užice. The Beneficiary is obliged to enable control and access to the documentation necessary for a fuller review of the request and control of the earmarked use of credit funds  at any time, from the submission of the request until the expiry of three years from the conclusion of the contract. The Fund is obliged to keep records of approved loans for ten years from the aid grant and to provide to the State Aid Control Commission, upon request, any information from the records.


The Fund will return all payments financed by the budget, based on approved loans, to the budget of the Republic of Serbia, as well as any eventual repayments by the client. This amount will be reduced by eventual costs of enforced collection of receivables, and the costs of the payment operations that fall on the budget of the Republic of Serbia.


For more information, please contact us via covid19@geciclaw.com