Refinancing Outstanding Debt Obligations

  1. Programme Objective 

Objective of this Programme is refinancing outstanding loan obligations for companies engaged in the following activities: production, tourism, hospitality, services, trade and agriculture. In this way, the end beneficiary is provided with favourable long-term loan facilities which enable long-term financial stability and balance.

2.      Loan Purpose 

The exclusive purpose of these loans is refinancing the existing loan obligations, which were initially approved at least 6 months before applying for refinancing, and based on the assessment of justifiability of refinancing. 

Refinancing of existing bank debt will not be approved for loan beneficiaries who invested their funds in the following manner:

  • Production and sale of military equipment or services;
  • Participation in projects violating internationally recognized employee rights, including safety at work, rules and procedures in Montenegro;
  • Any of the activities perceived as illicit or environmental and/or human health threat: gambling, tobacco, alcoholic beverages (except wine and fruit brandies);
  • Banking and insurance;
  • Foreign exchange and/or securities trading;
  • Immoral and illegal activities.

3.      Loan Beneficiaries 

Loan beneficiaries may be business entities involved in the following activities: production, tourism, hospitality, services, trade and agriculture. 

End beneficiaries of these loan arrangements may be entities that have obtained a confirmation from the Tax Administration on their tax arrears). 

Right to a loan is not a guaranteed right and IDF MN JSC shall enact a decision on each Loan Application.

4.      Lending Method 

IDF MN JSC implements this Programme through:

·         Direct lending to the loan beneficiaries,

- Exclusively for clients who meet the criteria of acceptable credit rating in accordance with the relevant internal acts of IDF MN JSC;

- There can be no refinancing of loans which the client must repay to leasing companies, insurance companies, non-financial institutions and companies engaged in the purchase of claims[1];

·         Financing end beneficiaries of loans through commercial banks that have established business relation with IDF MN JSC. 

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

Based on the Loan Agreement between a commercial bank and IDF MN JSC, the commercial bank shall enter into agreement with the end beneficiary of the loan.

5.      Loan Conditions 

Loans approved under this credit line, will be financed from own credit potential. 

A) Direct lending 

  • Maximum amount up to €3.000.000,00;
  • Minimum amount of € 10.000,00;
  • Interest rate of 4,00% annually with the proportional interest calculation method;
  • Maximum term of 10 years (including grace period);
  • Grace period up to 12 months. 

STIMULATIVE MEASURES FOR DIRECT CREDIT ARRANGEMENTS: For projects implemented in the municipalities of the northern region and in municipalities below the average development level at the level of Montenegro, special incentives will be granted in the form of interest rate cuts by 0.50%. Also, the stimulation will also apply to loans that are approved with the guarantees of some of the commercial banks or with the guarantee of the State, in such a way that the initial interest rate will be reduced by 1.00%. 

Special incentives will be approved to business entities that regularly settle their tax liabilities, i.e. are on the "white list" of the competent state body or have provided a certificate to properly settle their tax obligations by meeting the criteria to appear on the "white list", in the form of reduced interest rates by 0.50% (it is necessary to provide confirmation of the state body or an official document of the state body which will be submitted to the IDF MN JSC). 

Full exposure to one client including all connected persons shall be defined by the internal acts of IDF MN JSC. 

In case of a direct loan arrangement that is fully or partially supported by a bank guarantee, cash collateral or State guarantee, such loan arrangement or its proportional part shall not be considered as exposure of the end beneficiary. 

B) Lending through commercial banks

  • Maximum amount up to €4.000.000,00;
  • Minimum amount of € 10.000,00;
  • The interest rate shall amount to 4,50% annually (of which the bank belongs 3.00%, while IDF MN JSC in any case, keeps at least 1.5% with the possibility that the bank belongs to less than 3%);
  • Maximum term of 10 years (including grace period);
  • Grace period up to 12 months. 

In case the subject of refinancing is a loan which the same bank had previously realised in cooperation with IDF, it is necessary that the first approval happened at least 3 years prior to the submission of the refinancing request, otherwise a fee in the amount of 1,00% of the loan value shall be charged for loans approved via banks. 

Special lending conditions: 

For subjects implementing projects in northern municipalities of Montenegro and in municipalities with a below-average development level, the interest rate amounts to 4,00% on an annual level with proportional interest calculation method.

6.      Fees 

Direct loan arrangements shall be subject to the following fee: 

  • 0,40% on the approved amount for subjects implementing projects in northern municipalities of Montenegro and in municipalities with a below-average development level;
  • 0,50% on the amount approved for projects implemented in other municipalities. 

Fees for loans realized through commercial bank IDF MN JSC shall not be charged, and the fee shall be agreed upon between the bank and the end beneficiary except in cases defined in the point above.

7.      Utilization of Loan 

Loan beneficiaries are required to use the loan funds in accordance with this Programme and are required to provide IDF MN JSC evidence of closing of the loan that is the subject of refinancing while IDF MN JSC funds are transferred directly to institutions where credit obligations exist for the purpose of their refinancing. 

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, premiums, subsidies, grants and direct payments provided by the Ministry of Agriculture and Rural Development 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. 

Bills of exchange and bank authorizations shall be accepted as collateral, whilst the bank retains the right to contractually arrange means of security with the end beneficiary.

9.      Required Documents 

Documents required for realization of the project through direct loan arrangement:

·         Loan Application;

·         Projections of financial reports for the entire loan repayment period;

·         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;

·         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[2];

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

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

·         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;

·         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;

·         Proposal of the collateral;

·         Copies of the Agreement on refinancing;

·         Certificate on the state of credit borrowings that are refinanced. 

All documents shall be submitted in Montenegrin language. 

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

Documents required for realization of the project through and with the guarantee of a commercial bank: 

From commercial bank:

·         Decision of the commercial bank’s competent body; 

From end beneficiary:

  • Decision on registration of the end beneficiary in the court registry i.e. registry of the competent municipal authority;

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

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

·         Balance Sheet and Income Statement for the past two years;

·         Copies of the Agreement on refinancing;

·         Certificate on the state of credit borrowings that are refinanced. 

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 

This Credit Line shall be valid until 31 December 2019, to the utilization of funds in the amount of 25.000.000 € allocated for this purpose, until it’s altered or terminated. 

President of the Board of Directors of IDF MN JSC 

 PhD Zoran Vukčević 




[1] Except in cases when a solvent guarantor is provided or when the refinancing of the loan has been approved by the bank

[2]*Board of Directors of IDF may in special cases approve the higher loan amount than the specified maximum in accordance with specially defined criteria

LENDING

Factoring