Loan programme for redundant employees

 1. Programme Objective 

The aim of the programme is to support persons who were declared redundant in ensuring their own existence with the credit support of the Investment and Development Fund. This will allow those persons who have the potential for business to “take matters into their own hands” and to secure jobs for themselves and for others through realization of their business ideas.

2.      Loan Purpose 

Loans are intended for investments in fixed assets - tangible assets (buildings, equipment and appliances, livestock, long-term living plants, inventory...), intangible assets (product or service development, patents, licenses, concessions, copyrights, franchises...) and working capital. 

IDF may finance up to 75,00 % of the total investment value. 

The applicants for the loan can provide their own share in the amount of 25,00 % of the total investment value within one year since the day of signing the loan agreement. 

Loan amount dedicated to investing in working capital may be up to 30,00 % of the total loan amount. 

Financial support shall not be approved for the following purposes:

·         Parts of investments intended for meeting personal needs;

  • Catering facilities exclusively serving drinks;

·         Newspaper and other occasional edition publishing activities, activity of producing and airing radio and television programs, activities of newspaper agencies and services of marketing and public relations agencies;

·         Acquisition of shares in other companies, stocks and other securities;

  • Gas and petrol stations;
  • Construction of residential and business units for sale;
  • Production and sale of military equipment or services;

·         Motor vehicle sale points;

·         Completed investments intended for loan obligations refinancing;

  • Banking and insurance;
  • Foreign exchange and securities trading;
  • 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);
  • Immoral and illegal activities. 

3.      Loan Beneficiaries 

Loan beneficiaries may include:

Persons whose employment contract for an indefinite period was terminated due to technological, economic and restructuring changes (redundancies), and who are registered as unemployed with the Employment Agency of Montenegro; 

It is possible to make a preliminary decision on lending under certain conditions, including the registration of company. 

In case of approval of the loan by IDF MN JSC, beneficiaries must register their activity in one of the forms of organization established by the Law on Business Entities, or as defined by the rules of their corresponding area of activity (artisans, agricultural producers, PHI etc.). 

The applicant and/or related parties may not have more than 20.00% of ownership in another legal entity. 

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 shall be provided from the Company’s own credit potential.

Lending conditions:

·         Maximum amount up to € 50.000,00 for entrepreneurs up to € 30.000,00);

·         Interest 0%;

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

·         Grace period up to 4 years.

6.      Fees 

Fee amount

·         0,50% on the approved amount for subjects implementing projects in northern municipalities of Montenegro and in municipalities that are below the average value of the development index in Montenegro; 

  • 1,00% on the amount approved for projects implemented in other municipalities.

7.      Utilization of Loan 

Loan utilization period is up to 24 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 perform control of the dedicated usage of loan funds.

IDF MN JSC 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 Loan 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).

Exceptionally, in case of refunds of the paid investments, the transfer of funds to the loan beneficiary's account may be performed as a single payment, in accordance with the present rulebook of IDF MN JSC.

8.      Means of Security 

As means of security, IDF MN JSC shall accept bills of exchange, mortgage over immovable property (the estimated value of the immovable property must be at least equal to the amount of the request loan), bank guarantees, local self-governments’ guarantees, guarantees of the Government of Montenegro, guarantees of credit rating legal entities, stocks of receivables, administrative bans on income, at least one solvent guarantor (depending on the amount of the loan and the guarantor's income),and other generally accepted instruments of security in the banking sector, in accordance with the Acts of IDF MNE 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:

For making a preliminary decision:

  • Loan Application;
  • Investment programme in accordance with the methodology of IDF MN JSC, or an investment programme of an acceptable content;
  • Confirmation that the person lost the job due to technological, economic and structural changes;
  • Confirmation of the Employment Agency of Montenegro that the applicant is registered as unemployed in the registry of the Agency;

·         Authorization for retrieving data from the Regulatory Loan Registry of the Central Bank of Montenegro (RKR);

·         Copy of applicant's identity card;

  • Proposal of the collateral;
  • Pro-forma invoices (photocopy or original) on procurement of equipment and inventory, preliminary invoices for construction works, preliminary agreements on purchase of real estate (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.
  • Statement on household members;

For the construction / upgrade / reconstruction of a business facility:

        Property list of the real estate where the investment in question is not older than 30 days;

        Building permit (equivalent to the law);

        Proposed, pre-budget and bid for the execution of works.


·         For the purchase of office space:

        Real estate list where the real estate that is the subject of the sale is not older than 30 days;

        Pre-contract / contract for the sale of real estate (certified by a notary);


For making the final decision:

·         Decision on registration of the end beneficiary in the court registry i.e. registry of the competent municipal authority or 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 (RKR);

  • Valid form of certified signatures of persons authorised for representation (OP) and valid specimen signature card;
  • Statement on related parties[1] of newly established legal entity;
  • Pro-forma invoices which refer to a newly established legal entity. 

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 is valid until 31 December 2019, or until its amendment or termination. 


President of the Board of Directors of IDF MN JSC


PhD Zoran Vukčević


[1] Article 3 item 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)