Private Briefing July 2024
No. 136 | Year XII
The July Private Briefing highlights three distinct support programs from the Ministry of Economy that are active throughout the summer. While the first focuses on traditional crafts and home-made products, the second is aimed at youth and start-up initiatives, and the third targets rural women entrepreneurship. We conclude the Edition with the Innovation Funds Catapult, providing tailored support for business beginners through a specialized “two-step” model. This effectively supports various economic segments that often face significant challenges in securing commercial financing due to their specific characteristics.
Provincial Fund: Loans for Property and Equipment
// The palette of support programs by the Ministry of Economy of Serbia is gaining new tones and shades, as for the first time in mid-July, a public call was announced for a completely new category of support. It is a call for the allocation of grants to micro and small enterprises, entrepreneurs, and cooperatives that possess certificates for traditional and artistic crafts and home-based production.
// A total of 10 million dinars has been secured for the implementation of this program, and the funds are assigned for financing the purchase of new equipment and raw materials. Equipment refers to tools for professional use, while raw materials are the inputs and semi-finished products needed for the production of final products. Grants are approved at 100% of the purchase value, covering the entire cost of equipment and materials, ranging from 80.000 to 300.000 dinars. The financing is granted based on a pro forma invoice that is not older than the date of the public call, and the total purchase value of equipment and raw materials, including VAT, is eligible for financing. If the value of the equipment or materials exceeds 300.000 dinars, the beneficiaries can still qualify for support, provided that they cover the difference with their own funds. Eligible applicants are legal entities registered as companies or cooperatives until December 31, 2023, classified as micro and small legal entities, as well as entrepreneurs registered by the same date.
// Based on our experience gained through the pilot phase of the Sustainable Local Development Program (SLDP), traditional crafts and home-based production have proven to be a segment of the MSME and entrepreneurship landscape that is in dire need of support, as well as a segment where that support can take root in a highly fertile environment. The purpose of the program was to strengthen and improve the sustainability of existing local businesses, including traditional crafts and home-made products. Additionally, the aim was to support new business ideas and ventures. The program provided support for starting, developing, or changing a business model, from analyzing and evaluating the business idea to developing a business plan, identifying necessary investments, and creating an investment plan, as well as offering recommendations for improving business operations, support for financing implementation, and assistance for enhancing sales. During and after implementation, it became evident that traditional crafts and home-based products represent a category with significant market potential that can be effectively enhanced and integrated into the local market, achieving results that guarantee sustainability and development. Given the growing importance of rural tourism as a segment, along with global trends that further support this, investments in traditional crafts and home-based production are one aspect of economic support that will gain increasing significance in the future. In this context, the new program and call from the Ministry are certainly initiatives that deserve attention and recommendation.
Co-Financing Investments for Young Entrepreneurs and Start-Ups
// Another support program for SMEs overseen by the Ministry of Economy that we are analyzing is the Entrepreneurship Development Program through financial support for beginner entrepreneurs and youth, implemented in collaboration with the Development Fund and the Development Agency of Serbia. Qualified users are entrepreneurs and MSMEs not older than five years, whose founder and legal representative is an individual up to 35 years old, or those established after January 1, 2022, who have the status of beginner entrepreneurs (start-up) in this program. Through this program, with this year’s budget of 100 million dinars, beginners can count on financial support in the form of grants up to 30% of the investment value, or up to 40% in local government units of the third and fourth development group, while other companies can achieve 40% or 50% support relative to the total investment. In both cases, the remainder is provided as a loan from the Fund, indexed in euros, with a repayment period of up to 5 years, including a grace period of one year, and annual interest rate of 1.5% with a bank guarantee or 2.5% with other security means.
The total amount of approved funds per request cannot be less than 400 thousand nor more than 6 million dinars, and acceptable uses include financing the purchase of fixed assets in the form of equipment or vehicles, which this year also includes electric mopeds, as well as ongoing maintenance of business or production premises up to an amount of 1,000,000 dinars. In addition, acceptable uses include operational costs that can constitute up to 20% of the investment structure.
Considering the amounts and repayment terms, as well as the very favorable price of the credit part of the support, it can be said that the program adequately combines the purpose of the funds with the assessed needs of young entrepreneurs and companies, for whom the initial investment in equipment or vehicles is often just the step that will enable them to realize their business idea, for which they have identified market space and have the skills to implement.
To further support this step, through sets of specific business skills and knowledge, the program also opens the possibility for users to apply through accredited regional development agencies to undergo free training for starting a business and to receive advisory and technical assistance. The support provided by regional development agencies is carried out according to the Program of standardized service sets for MSMEs, signed by Glenfield, and delivered by certified trainers equipped with a set of tools and best practices in the very delicate area of working with young businesses or those that will become one. The service set includes support from a professional from an Accredited Regional Development Agency in providing standardized advisory services, one or more specialized trainings, and mentoring services lasting up to 40 hours.
// This is yet another initiative stemming from the Promotion of Entrepreneurship and Self-Employment Program (PESEP), implemented within the framework of German state cooperation, with the support of the Ministry of Economy of the Government of the Republic of Serbia and KfW, managed by the Office for Public Investment Management, which was implemented by the Serbian Chamber of Commerce and proudly signed by Glenfield. After the pilot phase, which included as many as 1,000 young businesses or those planning to go down that path, PESEP is today the largest regional program dedicated to all types of startups, with four different banks actively participating in the program and a unique mechanism, the first of its kind in Serbia: SEF (Serbian Entrepreneurship Foundation), developed precisely on the achievements of the successful pilot initiative with the aim of providing lasting support to small businesses to access financing. In this way, the number of users is rapidly approaching the goal of 3,000 business initiatives that are in the mode of developing their long-term sustainable, successful, and profitable business. This confirms that the combined approach of knowledge and skills and access to finance is key to generating new successful business ventures, making the Ministry’s program worth recommending. On the other hand, for all those who identify themselves as startups but do not fit the criteria of this program, we are available for a free assessment of eligibility for PESEP, which is a step closer to the possible creation of adequate business plan and applying for favorable financing from one of the participating banks.
Grants for Women Rural Entrepreneurship
// In this edition of Private Briefing, we conclude our analysis of the Ministry of Economy’s portfolio of support programs with the 2024 Women’s Entrepreneurship Development Program in Rural Areas, implemented in cooperation with the Development Agency of Serbia. The program provides significant support for micro-enterprises and female entrepreneurs engaged in the production of food products in rural areas. With a total fund of 30 million dinars, it offers grants for the purchase of new equipment and raw materials, covering up to 100% of the investment value, including VAT. The minimum grant amount is 300.000 dinars, while the maximum is 500.000 dinars.
Eligible beneficiaries are micro enterprises and entrepreneurs registered in by December 31, 2023, whose founders and legal representatives are women. Foreign individuals residing in the Republic of Serbia are also eligible to apply, provided they meet all other program criteria. Grant funds can be used to purchase new equipment for storage, processing, and packaging of agricultural products, as well as for the purchase of raw materials, which can reach up to 25% of the total investment. Exclusions include costs such as customs, transport, storage, and expenses related to equipment that has already been purchased or paid for. Beneficiaries who apply and receive funds are required to purchase equipment from credible suppliers and provide proof of purchase and payment of equipment by October 31, 2025, with spending monitored by Accredited Regional Development Agencies (ARRA) through field checks.
Like the support program for young people and start-ups, this program also provides free non-financial support through the ARRA network, which includes training and mentoring for women businesses to assist them in managing and developing their businesses. The service package for female entrepreneurs includes support from a professional at ARRA to the economic entity whose founder or owner is a woman or is one of the
owners with a majority stake (at least 51%) and one of the legal representatives. Support consists of available standardized advisory services, one or more specialized trainings, and mentoring services lasting up to 40 hours, with advisory services also including assistance in preparing documentation and developing a business plan when applying for programs at the Development Fund of the Republic of Serbia.
// With the application of free financial support, combined with the development of necessary knowledge and skills, the 2024 Women’s Entrepreneurship Development Program in Rural Areas represents an important step in strengthening overall, and especially entrepreneurship in rural areas of Serbia, significantly contributing to economic inclusion and sustainable development of local communities. This program fits into a series of existing initiatives and signals the direction of future initiatives that will further support rural development, women’s entrepreneurship, and broader economic and social inclusion. These programs are not only implemented within the framework of state support models but also significantly through programs of international development institutions, in cooperation with local banks. One such program is Women in Business by the EBRD, the largest regional program of its kind, moved from the pilot phase to a phase of global expansion with impressive results in all active markets. The program offers a unique blend of favourable financing for women-led businesses, high-quality skills enhancement package, and support for banks to adjust not only their products but also their communication and approach to this specific target group. Also, the EIB-funded project through which UniCredit Bank Serbia implements the “Impact Finance” loan is also active, aiming to create employment opportunities and improve working conditions for women, youth, and vulnerable social groups, offering special benefits for companies that employ them. In addition to these already active and well-known programs, several major initiatives are in the pipeline that will specifically address these issues, some based on the results of the SLDP program’s pilot phase and its effects on rural development, particularly rural tourism and local food products from domestic farmers and producers. All these programs aim to create a special environment for the development of these particular groups and segments, through a series of models of access to knowledge and finance, and we will continue to analyse them, both here and in our LinkedIn account.
Innovation Fund: The Fourth Katapult for Innovators
// The Innovation Fund has announced the fourth call for its acceleration program for innovative start-ups, called Katapult. Katapult includes companies in the early stages of product development and market entry that are seeking market validation, initial sales, and business model validation. Although some participants in this category may already have existing customers and market interest, start-ups without revenue but with intellectual property or technology assessed as unique and competitive will also be considered. Additionally, Katapult supports start-ups in the intensive growth phase, which are already generating market revenue and aiming to accelerate their growth and raise additional funds. Eligibility criteria include micro and small businesses not older than six years at the time of application, at least 80% privately owned, with no restrictions on the type of activit
Katapult provides financial support and intensive training, including mentorship. Non-refundable funds are allocated through a two-component funding model. The first component is an entry grant of 2.4 million dinars for companies classified in the early development category, or up to 6 million dinars for growth-stage start-ups, while the second component is a co-investment grant equal to the amount of qualified investment
the beneficiary secures independently, up to a maximum of 36 million dinars reduced by the amount of the entry grant. The co-investment component can be utilized over a period of 12 to 24 months, and companies can apply for it at any time during the acceleration program and for nine months after its completion, provided the investment secured by the beneficiary is at least 50.000 euros.
// The concept of Katapult, offering both funding for initial or additional product or service development and effectively doubling the initial investment secured by the beneficiary after training, makes it highly recommended for young companies that need significantly larger amounts than those offered by other financing programs. On the other hand, our practice shows that, in addition to a quality idea and a team capable of executing the project, the key element to successful application for IF programs is effectively bridging the gap between the idea and its realization. This is possible with sets of tools and techniques that enable the innovator to think like an investor. An innovative product and idea open doors, convincingly demonstrating the innovation is significant, but the key is financial engineering. The methodology of elaboration, from the idea through market assessment and internal analysis to quantifying potential, cash flow projections, ROI estimates, and exit strategies, is the foundation and a necessary condition for effective negotiations with professional investors and securing funding. Glenfield consultants, with decades of experience in analysing innovative ideas and transforming them into quantitative models, are available through these calls to help innovators maximize their chances for funding and market success. Learn how with the special bonus package available to Private Briefing readers. Send an inquiry to office@glenfield.rs, subject “Innovations” to avoid the most common pitfalls in the project preparation and presentation process.
| KEY ECONOMIC INDICATORS | Jul - 24 | |
|---|---|---|
| 1 | Annual inflation | 3,80% |
| 2 | Reference interest rate | 6,00% |
| 3 | Unemployment rate | 9,40% |
| 4 | Average net salary - RSD | 100.170 |
| 5 | Average pension - RSD | 45.719 |
| 6 | Exchange rate RSD/EUR | |
| On the last day of the month | 117,0490 | |
| Average exchange rate for the month | 117,0721 | |
| 7 | Exchange rate RSD/USD | |
| On the last day of the month | 109,5247 | |
| Average exchange rate for the month | 108,6906 | |
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