Urban development fund

Upon the order of the Ministry of Regional Development and EU Funds of the Republic of Croatia, HBOR implements the Urban Development Fund financial instrument that is financed from the funds of the European Regional Development Fund (ERDF) and from HBOR’s own funds in accordance with and under this loan programme with an objective of financing new long-term investments of LRGUs, companies, institutions, agencies and other legal entities owned by them or by the Republic of Croatia.

Loans can be disbursed to Borrowers until 31 December 2029, whereas criteria for Capital Discount (write-off of a part of loan principal) can be met after that date.

1. Borrowers

Public sector entities*:

Units of local or regional government (LRGUs): municipalities, cities and counties;
Companies, institutions, agencies and other legal entities owned or majority-owned by LRGUs and/or the Republic of Croatia

*Ineligible Borrowers are defined in Schedule 1 - Ineligible Activities and Borrowers.

2. Purpose of Loans

Capital investments (investments in fixed assets - tangible and intagible assets) of public entities in mixed commercial/public infrastructure, i.e. investments that, in addition to the public element, also have a certain commercial content that implies the generation of revenues from the collection of service fees.

The Goal of the financed Investments can be:

to encourage the projects of environmental protection, energy efficiency and renewable energy sources,
generally the construction of multi-purpose, sports, tourist, socio-cultural, business and similar infrastructure.

Investments must comply with Do No Significant Harm principle (DNSH).*

*Criteria and examples of compliance with the Do No Significant Harm principle are available in Schedule 3 - Short instructions to loan applicants for the preparation of project/technical documentation for the criteria of DNSH and infrastructure resistance to climate change.

3. Eligible investments

Financially sustainable investments*
Investments on the territory of the Republic of Croatia
Investments in line with territorial strategy or other equivalent strategic document on the included areas that contains the following elements:

Geographical area covered by te strategy,
Analysis of development needs and potentials of the area, including economic, social and environmental interconnections,
Description of integrated approach to solving the established development needs and potentials of the area,
Description of the participation of partners in the preparation and implementation of the strategy.

The investments need not necessarily have to be listed in strategic documents, but they must be aligned with their strategic goals.

The compliance of the investments with the relevant strategic documents is confirmed by the Borrower by the "Declaration of Conformity" in the loan application form.

Ineligible investments are defined in Schedule 1 - Ineligible Activities and Borrowers.

*Eligible are financially profitable projects, i.e. those projects with the potential to generate adequate cash flows sufficient for regular loan repayment.

4. Manner of Implementation

Direct lending to borrowers - application and related documentation shall be submitted to HBOR by the borrower
Loans are approved from ERDF funds and HBOR funds in a 50:50 ratio with the possibility of writing off a part of the ERDF loan principal (up to a maximum of 50% of the total loan amount) upon the fulfilment of predefined criteria

Borrowers may submit more than one loan application provided that the previous project, financed under this loan programme, has been completed and put into operation as evidenced by relevant documentation (e.g. occupancy permit or other applicable document).

5. Loan Amount

Minimum loan amount: generally, loans below EUR 100,000 are not approved
Maximum loan amount: EUR 10,000,000

It is possible to finance up to 100% of the estimated investment value without VAT. Also, it is possible to finance up to 100% of the estimated investment value including the coresponding VAT if the borrower will not use the VAT deduction for all delivered goods and services for the investment financed under this Loan Programme.

6. Loan Currency

EUR

7. Capital discount (write-off of a part of loan principal)

Upon the fulfilment of the given criteria*, borrowers can exercise the right to a capital discount, i.e. a write-off of a part of loan principal as an aid in the form of a grant.

Maximum amount:

up to 50% of the total loan amount, provided that a part of loan principal from the ERDF funds is written off in the amount of the calculated capital discount.

*The criteria for the capital discount and the perdcentage of write-off of a part of loan principal that can be realised on the basis of each fulfilled criterion are defined in Schedule 2 - Criteria for Capital Discount.

8. Interest rate

On the part of loan principal from the ERDF funds: 0.00% p.a., fixed
On the part of loan principal from HBOR funds: The interest rate is determined three-monthly; it stands at 3.10% p.a., fixed*.

It is applied to loan applications received by 31 December 2024. and indicative offers that will be issued by 31 December 2024.**

*HBOR reserves the right to change the interest rates before 31 December 2024.
**Interest rates stated in the indicative offer are applied to loan applications received on the basis of the issued indicative offers of HBOR, whose validity period has not expired by the date of loan application submission.

9. Fees

Loan application processing fee: no fee is charged
Commitment fee: no fee is charged

Other fees are not charged on the part of loan financed from the ERDF funds. On the part of loan financed from HBOR's funds, other fees are charged in accordance with the Ordinance on Fees for HBOR Services valid on the day of calculation.

10. Period and Manner of Loan Disbursement

Generally, disbursement period is up to 24 months; depending on the purpose and dynamics of investment, it is also possible to approve a longer period of loan disbursement.

Generally, the funds are disbursed to the account of seller/supplier/contractor based on the documentation evidencing the use of loan funds for earmarket purposes.

11. Period of Repayment

up to 15 years, up to 12-month grace period included

12. Manner of Repayment

Generally, in equal monthly, three-monthly or semi-annual instalments

13. Collateral

Financing of LRGUs is possible if secured only with debentures, depending on the assessment of HBOR
In the case of loans to companies, institutions, agencies and other legal entities owned or majority-owned by LRGUs and/or the Republic of Croatia, it is necessary to obtain guarantees of LRGUs or the Republic of Croatia in addition to debentures, unless the legislation and the articles of incorporation stipulate that LRGUs or the Republic of Croatia guarantee/guarantees for the obligations of the borrower unconditionally, irrevocably and at first demand without issuing a special guarantee deed

14. Schedules

Schedule 1 - Ineligible Activities and Borrowers
Schedule 2 - Criteria for Capital Discount
Schedule 3 - Short instructions to loan applicants for the preparation of project/technical documentation for the criteria of DNSH and infrastructure resilience to climate change

15. Related Documents

General Eligibility Criteria, Annex 1.2 - Paris Agreement Alignment; Annex 2 - Green Eligibility Table
List of Documentation
Decision on General Terms and Conditions of Lending Activities of HBOR

This document has been prepared with the support of the European Union. The opinions contained in teh document do not necessarily reflect the official opinions of the European Union.