Small- and medium-sized enterprises say they need loans, but are concerned about their ability to repay them.
By Biljana Pekusic for Southeast European Times in Belgrade -- 20/08/13
Serbian small- and medium-sized businesses will have access to a new round of loans from the European Investment Bank. [Nikola Barbutov/SETimes]
A new round of loans from the European Investment Bank (EIB) will make 50 million euros available to small- and medium-sized enterprises (SMEs) in Serbia. But there is concern within the Serbian business community about the terms and conditions of the loans, leaving open the possibility that the funds won't be fully utilised.
Since 2002, the EIB has approved 656 million euros of credit in Serbia, of which 315 million was borrowed through 426 loans. The loans helped to create 3,811 new jobs.
"The bank of the European Union continues in its support activities to Serbia in the path toward EU accession and rapid, complete integration into the Union," said Dario Scannapieco, the EIB vice president responsible for the Western Balkans.
Credit Agricole Group and CA Leasing Serbia will manage the loans, which will be targeted at the development of agriculture and infrastructure in local communities.
Companies with fewer than 3,000 employees are eligible to apply for the loans, which will be given in amounts from 40,000 euros to 12.5 million euros for investment in equipment, vehicles, offices, storage facilities and new projects valued at less than 25 million euros.
The funds are intended for investments in the knowledge economy, energy, environment, health, education and services. The loans also can be used for the research of new methods of production and the establishment of markets within the EU.
"Investing in the sales network in European countries is of crucial importance for Serbian small and medium businesses," Ruza Cirkovic, an economic journalist for Serbian weekly Nin, who monitors foreign trade flows, told SETimes.
She added that smaller companies do not have enough of their own money to enter the European market, making the EIB loans particularly helpful.
The repayment period of the loans is from 2 to 12 years with a grace period of 2 to 4 years.
Cluster House, an NGO that helps promote business contacts among SMEs, said the EIB loans are not favourable given the conditions of Serbia's economy.
"Banks in Serbia which manage these loans require very high security measures, mortgages that small and medium businesses cannot afford," Danka Milojkovic, director of Cluster House, told SETimes.
She added that a large number of business owners have had bad experiences with the bidding process for previous EIB loans and have been rejected. Milojkovic said the information on the current round of loans was sent to all 3,000 of Cluster House's members, but only six responded that they were interested.
Gumateks, a Nis manufacturing firm, would like to purchase machinery, but company director Miroljub Cvetkovic said he is reluctant to accept credit and a significant mortgage.
"We produce rubber products which are used in various types of industries, and we need to increase production," Cvetkovic told SETimes.
Vlada Vasiljevic, owner of the Tina furniture factory in Knjazevac, told a similar story.
"We need new machines. We want to increase production, but the conditions that banks have required for loans before can take us into bankruptcy rather than extending our work," Vasiljevic told SETimes.
Credit Agricole Bank did not specify the conditions that businesses must meet for the EIB loans, saying that "more precise information and advisory help" are available in any of its 80 branches in Serbia.
Should banks give more favourable terms and conditions to small businesses seeking loans? Share your thoughts in the comments section.