COVID-19 Serbia Update

New COVID-19 State Guarantee Scheme for EUR 2 Billion Loans

Last Updated on 19 April 2020, 10:00 CET

As part of a package of economic measures worth EUR 5.1 billion, the Serbian Government adopted a decree on 16 April 2020 establishing a guarantee scheme for loans to be provided by local banks to businesses to reduce the effects of the COVID-19 pandemic (the “COVID-19 Guarantee Scheme”).

General Information on the Guarantee Scheme

COVID-19 Guarantee Scheme provides for a framework under which the state will act as a guarantor for the benefit of Serbian banks that extend loans for liquidity financing and working capital to businesses during 2020 to deal with negative economic and financial consequences of the COVID-19 pandemic. The state guarantee is unconditional and payable on first demand. Banks may place up to EUR 2 billion in loans to businesses within this program, while the maximum amount of the state guarantee for a covered portfolio is EUR 480 million.

Eligibility Criteria & Requirements

The Decree deals with a number of important matters such as the allocation of total funds intended to serve the purpose of guaranteeing between banks, allocation among the types of loans, maximum and minimum percentages of coverage, disqualifying criteria as well as eligibility requirements for the borrowers.

The scheme is intended for loans to borrowers that were not in financial difficulties, restructuring or loan non-performing status immediately prior to COVID-19 breakout (with 29 February 2020 being the cut-off date). Large businesses are excluded, as well as borrowers which have due unpaid tax obligations. The guaranteed loans may not be used for refinancing, but the loans which replace an existing loan that falls due after entering the guarantee and until the end of this year are eligible. The maximum amount of the loan is EUR 3 million (i.e. 25% of the borrower’s last year income). The currency of the loans is EUR or RSD. Maximum interest rates under the loans will be 1M BELIBOR + 2,5% i.e. 3M EURIBOR + 3%. Loan agreements must be entered into during 2020 and funds disbursed until 31 January 2021.

Among other conditions, the borrower and each of its direct shareholders holding 25% or more shares are required to provide to the bank promissory notes as security for the loan. Loans may be granted for a period of up to 36 months, while the borrower is not allowed to pay out dividends or repay shareholder loans during the first year period.

Allocation among banks of the first half of the funds (EUR 1 billion) will be done based on the market share of each bank in the MSME lending segment. The remaining guarantees will be available for banks that have used 90% of the maximum guarantee portfolio and report so to the Ministry of Finance by 15 January 2021.


The basis for implementing the guarantee scheme is an agreement that will need to be entered into by the Government, National Bank of Serbia and a bank. The COVID-19 Guarantee Scheme is in force as of 16 April 2020, and the Ministry of Finance is responsible for supervising and monitoring its implementation. The banks will report about the realization of the scheme to the Ministry of Finance and the National Bank of Serbia.



The information in this document does not constitute legal advice on any particular matter and is provided for general informational purposes only.