The European Commission on Thursday approved an up to €500 million Croatian scheme to support companies across sectors in the context of Russia's invasion of Ukraine, the EC reported.

The scheme was approved under the State aid Temporary Crisis Framework, adopted by the Commission on 23 March 2022, based on Article 107(3)(b) of the Treaty on the Functioning of the European Union (‘TFEU’), recognising that the EU economy is experiencing a serious disturbance.

The EC’s Executive Vice-President Margrethe Vestager, in charge of competition policy,  was quoted as saying that “in a period during which the functioning of the market is severely disturbed, this up to €500 million Croatian scheme will ensure that sufficient liquidity remains available to those companies affected by the current geopolitical crisis by incentivizing lending by private banks.”

“We continue to stand with Ukraine and its people. At the same time, we continue working closely with Member States to ensure that national support measures can be put in place in a timely, coordinated and effective way, while protecting the level playing field in the Single Market,” she said.

Support to companies across sectors active in Croatia

Croatia informed the EC under the Temporary Crisis Framework an up to €500 million scheme to support companies across sectors active in Croatia in the context of Russia’s invasion of Ukraine.

The measure will be open to companies active in all sectors affected by the current crisis, except credit and financial institutions.

Measure to be administered by HBOR

Under this measure to be administered by the Croatian Bank for Reconstruction and Development (HBOR), the aid will consist in limited amounts of aid or liquidity support in any of the following forms: (i) direct loans;(ii) subsidised loans; or (iii) interest rate subsidies, says the EC.

This measure is aimed at incentivising lending by private banks to companies severely affected by the current geopolitical situation in a period during which the normal functioning of the market is significantly disturbed.

When it comes to limited amounts of aid, (i) the support will not exceed €35,000 per company active in the agriculture, fisheries and aquaculture sectors and €400,000 per company active in all other sectors; and (ii) the aid will be granted by 31 December 2022 at the latest, says the EC.

When it comes to liquidity support in the form of subsidised loans, the maximum amount per beneficiary will be equal to (i) 15% of its average total annual turnover over the last three closed accounting periods; or (ii) 50% of the energy costs incurred over a 12-month period preceding the application for aid.

Furthermore, (i) the maturity of the loans is limited to six years; (ii) the annual interest rates on the loans respect the minimum levels set out in the Temporary Crisis Framework; (iii) the loans relate to investment or working capital needs; and (iv) the loans contracts will be signed by 31 December 2022 at the latest.

Exceptionally, when the companies are active in sectors that are particularly affected by direct or indirect effects of the current geopolitical crisis and the related sanctions, the amount of the loan may be increased to cover their liquidity needs (i) for a 12-month period for SMEs; and (ii) for a 6 month-period for large enterprises.