The Croatian Bank for Reconstruction and Development (HBOR) can become a very effective service supporting all entrepreneurs, notably micro and small enterprises, which make up the majority of the Croatian economy, but it must offer them its services, Entrepreneurship and Crafts Minister Darko Horvat said on Friday, opening an HBOR microcredit conference.
He said HBOR must not be a commercial bank but develop its business network, offering financing not just to excellent clients, but also riskier ones such as beginners, disabled persons or women. He added that aside from HBOR, the Croatian Postal Bank could be another tool whereby the government could support entrepreneurs.
Horvat said the subsidy system used until now had not yielded results, posing a fiscal burden not just for the state but local government too. He said that last year alone the state spent HRK 36 million to subsidize businesses' interest rates.
He said interest rates were historically low on the global financial market now and that Croatia's institutions, despite an unfavourable credit rating, could borrow at 1% interest, whereas businesses were charged 4.5-5%. He said the interest rate ceiling for financing businesses should be 3% and called for absorbing European Union funds for businesses better and more efficiently.
HBOR CEO Dusan Tomasevic said half the 2,000 loans approved by the bank in 2015 were approved for microenterprises.
They make up over 89% of all businesses in Croatia (340,000), employing nearly 30% of all employees. Despite that, they account for only 11% of all revenues, 12.3% of all investments and a little over 5% of all exports.
This shows the need for stronger institutional support for this important sector of the Croatian economy because this is also a social issue, since many microentrepreneurs, notably beginners, were previously unemployed, said Tomasevic.
HBOR's microcredit programme is being implemented in cooperation with the European Investment Fund and the EU as part of competition and innovation programmes. The highest microloan amount is EUR 25,000, with a maximum year-long grace, a maximum five-year repayment period and a 3.7% interest.