Programme of financing permanent working capital for micro, small and medium business - CEB

  1.  Programme Objective 

The aim of the programme is to support the development of entrepreneurship in cooperation with the Council of Europe Development Bank.  

2.      Loan Purpose 

Permanent working capital encompasses funds required for financing current obligations arising from regular business activities of the end loan beneficiary, pertaining to raw material and material, inventories, other production costs, accounts receivable. 

In accordance with the above, loan funds may be used for:

·         purchase of raw material, production material, intermediate products, inventory;

·         Overheads. 

Loan funds may not be used for:

·         Repayment of existing loans (except in the part of the funds obtained through the refund of the investment);

·         Strictly financial activities (i.e. purchase of securities);

·         Lending to buyers or other natural persons and legal entities;

·         Procurement of fixed assets. 

Financial support shall not be approved for the following purposes:

  • 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 

Način Loan beneficiaries may be companies and entrepreneurs and all forms of organizing established by the Law on Business Entities, as well as subjects engaged in business activities governed by the rules of their corresponding area of activity (artisans, agricultural producers, PHI etc.). 

Through this credit line, IDF MN JSC shall finance projects of end users who make their profit in one of the following fields: 

  • Production;
  • Wood processing;
  • Agriculture and food production;
  • Tourism and hospitality;
  • Services;
  • Trade; 

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. 

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

5.      Loan Conditions 

Loans approved under this credit line, will be financed 50% from the Council of Europe Development Bank:

  • Maximum amount up to € 100.000,00

·         Interest rate of 4% annually with the proportional interest calculation method;

·         Maximum term of 6 years (including grace period);

·         Grace period up to 1 year. 

Special lending conditions:

  • For subjects implementing projects in northern municipalities of Montenegro and in municipalities below the average value of the development index in Montenegro, the interest rate amounts to 3,50% on an annual level with proportional interest calculation method. 
  • In case of a direct loan arrangement that is fully 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. 

6.       Fees 

Fee amount 

  • 0,30% on the approved amount for subjects implementing projects in northern municipalities of Montenegro and in municipalities 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 

Loan utilization period is up to 6 months.

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.

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 check whether the loan is used for the stated purpose, and the approved funds cannot be used for paying obligations to natural persons, related persons, nor paying internal invoices.

IDF MN JSC shall execute approved direct loans by transferring funds to the User's account optionally on a one-time basis. 

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 Acts of IDF MN JSC 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 

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

  • Loan Application;
  • Projections of financial reports for the 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;
  • 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;
  • 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;
  • Pro-forma invoices, preliminary agreements (photocopy or original) on procurement of raw materials, intermediate products, inventory and payment of monthly bills (IDF MN JSC shall not accept offers/preliminary agreements issued by natural persons, exception being purchase of real estate, offers/preliminary agreements issued by related parties or 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 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 

This Credit Line shall be valid until 31 December 2019, until it’s altered or terminated. 

President of the Board of Directors of IDF MN JSC 

       PhD Zoran Vukčević

 

 

 

 

 

 

LENDING

Factoring