Industry Modernisation Support Programme

1. Programme Objective 

Support program for the modernization of the industry is being implemented in cooperation with the Ministry of Economy of Montenegro. This Support Program will contribute to the realization of the goals defined by the Industrial Policy of Montenegro until the end of 2020 and it is one of the key activities within the implementation of the Action Plan of the Industrial Policy of Montenegro 2016-2020. It is an integral part of the most important strategic and development documents of Montenegro (Economic Reform Program for Montenegro 2018-2020 and Montenegro's Development Prospects 2018-2021), and it is also in line with the strategic goals of strategies related to competitiveness (Regional Development Strategy 2020 and the South East Europe Development Strategy by 2020). 

Specific objectives of the program are:

  • improvement of technological processes, products and services,
  • increasing the volume and value of sales,
  • reducing the cost of equipment purchasing,
  • reducing the cost of financing the production equipment by subsidizing part of the cost of purchasing the equipment.

2.      Loan Purpose 

The loans are intended to finance equipment, as follows:

·         New production equipment and/or machinery;

·         Used manufacturing equipment and/or machinery, no older than five years and

·         New parts, specialized tools for machinery or other capital goods that will be used in order to put into operation the unused machines. 

Loan funds may not be used for:

·         Purchase of passenger, cargo and commercial vehicles;

·         All costs related to the purchase of equipment such as: customs and administrative expenses, the cost of shipping, handling and storage, assembly and installation of equipment, training, etc.;

·         All costs related to the approval and implementation of the IDF loan, such as costs of: processing of the loan, interest, insurance of movables, exchange rate differences and similar;

·         Refund for already purchased equipment;

·         Loans and installments for repayment of loans as well as loan restructuring;

·         Other costs that are not in accordance with the purpose of the Pilot Program. 

IDF may directly finance up to 50,00% of the total investment value.

The loan must be fully used to purchase equipment. 


3.      Loan Beneficiaries 

The support program is intended for business entities operating in the manufacturing sector. The right of participation is registered micro, small and medium-sized enterprises at least 2 years old and whose main activity is registered in the manufacturing industry (classified from C10 to C33), in accordance with the Law on Classification of Activities:

  • Food production;
  • Production of beverages (excluding alcoholic beverages);
  • Manufacture of textiles (excluding synthetic fibers);
  • Manufacture of wearing apparel;
  • Manufacture of leather and leather products;
  • Manufacture of wood and products of wood, cork, straw and plaiting materials, except furniture;
  • Manufacture of paper and paper products;
  • Printing and reproduction of audio and video recordings;
  • Manufacture of chemicals and chemical products;
  • Manufacture of basic pharmaceutical products and preparations;
  • Manufacture of rubber and plastic products;
  • Manufacture of other non-metallic mineral products;
  • Manufacture of basic metals (except steel);
  • Manufacture of metal products, except machinery and equipment;
  • Production of computers, electronic and optical products;
  • Manufacture of electrical equipment;
  • Manufacture of machinery and equipment not elsewhere specified;
  • Manufacture of motor vehicles, trailers and semi-trailers;
  • Manufacture of other means of transport;
  • Manufacture of furniture;
  • Repair and installation of machinery and equipment;
  • Other manufacturing industries. 

Support program does not apply to the following activities:

  • Primary agricultural production;
  • Production of tobacco products;
  • Trade (retail and wholesale);
  • Production of steel, synthetic fibers and coal mining;
  • Manufacture of coke and refined petroleum products;
  • Manufacture and sale of weapons and military equipment;
  • Organizing gambling and related activities;
  • Production and marketing of any product or activity deemed illegal or harmful to the environment and dangerous to human health;
  • Activities considered forbidden under local regulations or international conventions. 

Equipment that is the subject of financing cannot be purchased from a private individual.

Funds cannot be used by newly established business entities (entrepreneurs and companies). 

The ultimate beneficiaries of these credit arrangements can be entities that provide a confirmation of the tax administration stating that they regularly settle their tax liabilities. 

There is no entitlement to the loan, and IDF MONTENERGO JSC passes a special decision on the basis of each individual request.

4.      Lending Method 

The support program for the modernization of the processing industry implies realization of the planned investment - procurement of equipment, partially or completely, through a loan arrangement with the Investment and Development Fund of Montenegro (IDF MNE JSC). 

If a business entity meets the requirements of the Program and the IDF approves a loan, the potential beneficiary can obtain the right to a subsidy of up to 20% of the value of the equipment purchase (excluding value added tax) on the amount of funds provided through the IDF loan arrangement, in accordance with the Program and the rules for granting state aid. 

Loan Applications that are not supported with mandatory defined documents shall not be taken into consideration.

5.      Loan Conditions 

  • Loan amount: € 100,000.00, and for an amount higher than € 100,000.00, maximum loan ammount is defined by a special credit line for the activity;

•     Interest rate: 3,50% annually with the proportional interest calculation method;

•     Maximum term of 12 years (including grace period);

•     Grace period up to 4 years. 

Special lending conditions:

  • For subjects implementing projects in northern municipalities of Montenegro and in municipalities that are below the average value of the development index in Montenegro, the interest rate amounts to 3,00% on an annual level with proportional interest calculation method.

6.      Fees 

Fee amount:

  • 0,30% on the approved amount for implementing projects in northern municipalities of Montenegro and in municipalities that are below the average value of the development index in Montenegro;
  • 0,40% on the amount approved for projects implemented in other municipalities.


7.      Utilization of Loan 

Final utilization period shall be established on the case-by-case basis for each individual loan arrangement dependent on the real needs and the dynamics of investing in line with the criteria defined in the public call of the Ministry of Economy of Montenegro.

Loan beneficiaries shall be obliged to a dedicated usage of loan funds in accordance with this programme and agreement signed between IDF MN JSC and loan beneficiary.

IDF MN JSC shall perform control of the dedicated usage of loan funds.

IDF shall execute approved direct loans whose purpose is investing in fixed assets (and inventory), by transferring funds to:

  • The supplier’s account or service/works provider or
  • Loan beneficiary account, in single or in tranches - in phases. 

Transfer of funds directly to the Beneficiary’s account in tranches – in phases, means that, as a general rule, the subsequent transfer of funds will not take place until the Beneficiary justifies dedicated usage of prior realized funds under the approved loan (fund per already transferred tranches).


8.      Means of Security 

As means of security, IDF MN JSC shall accept bills of exchange, mortgages over immovable property, bank guarantees, local self-governments’ guarantees, guarantees of the Government of Montenegro, guarantees of prudential legal entities, stocks of receivables  and other generally accepted instruments of security in the banking sector, in accordance with the present collateral policy and decisions passed by competent bodies of IDF MN JSC. 

All costs with regard to providing instruments of security as well as of the execution of insurance-related tasks, deletion and retrieval of realized instruments shall be carried by the loan beneficiary.


9.      Required Documents 

·         Loan Application;

·         Proof of submitting a grant application to the Ministry of Economy of Montenegro;

·         Investment programme in accordance with the methodology of IDF MN JSC, or an investment programme of an acceptable content;

·         Excerpt from the Central Registry of Business Entities - not older than 30 days;·          

·         Certificate on VAT registration, if the end user is subject to the VAT;

·         Valid Statute of the Company;

·         Authorization for retrieving data from the Regulatory Loan Registry of the Central Bank of Montenegro (RKR), including founders and related parties[1];

·         Valid form of certified signatures of persons authorised for representation (OP) and valid specimen signature card;

·         Tax Administration certificate on settled taxes and contributions – not older than 30 days;

·         A set of annual financial statements (Balance Sheet, Income Statement, annual account balance (Trial balance), analytical breakdown of buyers and suppliers) – for the past two years, as well as the interim aforementioned reports for the current year, exception being the clients that are not subject to mandatory compilation of financial statements;

·         Audit report for loan beneficiaries that are subject to statutory audits under the law;

·         Official form for reporting on settlement of monthly taxes and social contributions for employees, verified by the Tax Directorate as evidence of the number of employees;

·         Proposal of the collateral;

  • Invoices (original or copy) for the purchase of equipment (IDF MONTENERGO JSC shall not accept offers/preliminary agreements issued by natural persons, offers/preliminary agreements from related parties as well as internal invoices). The documents in subject may not be dated more than three months from the date of the submission of the Loan Application. 

All documents, as a general rule, shall be submitted in Montenegrin language. 

Executive office of the IDF MN JSC retains the right to request additional documents.

10.  Other Provisions 

Additional rules applicable to this Loan Programme, which are not mentioned in this document, are defined in special acts passed by competent bodies of IDF MN JSC.

11.  Credit Line Validity 

The credit line runs until 31 December 2019, its changes, termination, or until the funds earmarked by the Ministry of Economy of Montenegro for allocation of grants under this line are exhausted. 

President of the Board of Directors of IDF MN JSC 

        PhD Zoran Vukčević

[1] Article 3, point 8 of the Law on Banks - (Official Gazette of Montenegro 17/08 of 11 March 2008, 44/10 of 30 July 2010, 40/11 of 8 August 2011)