Access to financing is one of the key issues for the development of the economy of Bosnia and Herzegovina. For a company entering into a new contract, purchasing equipment or expanding production, it is not enough for capital to exist on the market. It must be available at the right time, on acceptable terms and through a process that understands the dynamics of business operations. This is precisely where there is room for critically examining the relationship between conservative banking regulation and the needs of entrepreneurs.

In this analysis, Stevanović Law Firm starts from the question: can a system that legitimately insists on security at the same time become sufficiently flexible to support sound business projects, including those that do not have a long operating history or significant assets available as collateral for loans?

The banking framework in Bosnia and Herzegovina is based on entity-level laws and the supervision of the Banking Agency of Republika Srpska and the Banking Agency of the Federation of Bosnia and Herzegovina. The Central Bank of Bosnia and Herzegovina maintains monetary stability through the currency board arrangement and coordinates the activities of the entity agencies, which are responsible for the licensing and supervision of banks. This division of responsibilities is important for understanding who is responsible for the conditions under which banks operate.

The regulatory framework covers requirements concerning capital, risk management, liquidity, large exposures, reporting and supervision. Particular importance is attached to rules on credit risk management and the determination of expected credit losses. Their purpose is to ensure that a bank identifies and financially accounts for risk before it turns into an uncollectible receivable. This approach protects depositors and the stability of the system, but it also affects the way in which the financing needs of the economy are assessed.

In our assessment, the conservative nature of this framework is most strongly felt by companies whose development precedes their financial track record. A new company may have a strong team, contracted business and a genuine market opportunity, yet still struggle to meet credit assessment requirements. A similar problem may arise for a rapidly growing company: it needs more working capital precisely at a time when its previous financial statements do not yet reflect the full scale of its future business activity.

At the same time, a distinction should be made between regulatory obligations and a bank’s internal business decisions. Regulations establish the framework, while the bank determines its willingness to assume risk, the sectors it considers acceptable, collateral requirements and the approval process. Therefore, every request for additional documentation or rejection of a loan application is not a direct consequence of the law. However, from the entrepreneur’s practical perspective, the result is the same if the necessary funds cannot be obtained on time.

The latest data reviewed from the Central Bank of Bosnia and Herzegovina require precision when assessing the market. The survey for the second quarter of 2026 shows that credit standards for companies were unchanged, but interest rate margins had a tightening effect on lending conditions. At the same time, banks expected credit standards to tighten in the third quarter. This expectation is not evidence that tightening had already occurred, but it indicates caution in lending policies.

Therefore, the claim that businesses are finding it increasingly difficult to obtain bank financing should be considered in relation to specific categories of companies and their needs. A stable company with high-quality collateral and a long operating history may be in a completely different position from a small entrepreneur, a new investor or a company requiring short-term financing for a contracted project. The availability of credit at the system level does not mean equal access for every market participant.

For an entrepreneur, time has a cost. If a purchase has to be paid for today while payment from the customer is expected in three months, a multi-week approval process can jeopardize the execution of the business. In such a situation, even a more favorable bank loan loses part of its value if the funds arrive after the moment when they were needed.

This explains the appeal of alternative sources of financing: factoring, private loans and other contractual arrangements with investors. Their advantages may include faster decision-making, direct contact with the financier and the ability to adapt financing to a specific transaction. The price of such flexibility, however, may be a higher interest rate, a higher fee, a shorter repayment period or more demanding collateral requirements.

Factoring is particularly important for companies that have receivables from customers but need liquidity before those receivables become due. Depending on the agreement, the assessment may rely more heavily on the quality of the receivable and its debtor. Nevertheless, factoring should not be presented as an unregulated activity: in the Federation of Bosnia and Herzegovina, there is a specific Factoring Law and a related regulatory framework of the Banking Agency.

A second category consists of private financiers operating through limited liability companies and providing financing outside the traditional banking offering. Such arrangements may, in economic terms, resemble small private lending funds. However, the expression “a fund hidden in the form of an LLC” requires legal precision: an ordinary commercial company does not thereby acquire the status of an investment fund, nor does registration of a company itself constitute authorization to conduct every type of financial activity. The permissibility depends on the actual business model, the source of funds, the manner in which those funds are raised and the regulations applicable to the activity.

Less bureaucracy does not necessarily mean lower cost or lower risk. Every alternative financing arrangement must be assessed in terms of its total financing cost: interest, fees, discounts, collateral costs, extension conditions and the consequences of late payment. A short-term fee that appears acceptable may represent a high cost when compared with the duration of the financing. In factoring, it is particularly important to understand whether the financier has recourse rights and who ultimately bears the risk of non-payment.

The comparison with the United States raises the question of a different regulatory direction. On March 19, 2026, U.S. federal banking agencies presented three proposals to reform the capital framework, aimed at simplifying the rules and better aligning capital requirements with actual risk. According to their assessment, the proposed changes would moderately reduce overall capital requirements while maintaining capital significantly above pre-global-financial-crisis levels. These are proposals, and their presentation should be distinguished from final adoption.

On September 30, 2026, the Federal Reserve also adopted changes to the stress-testing framework aimed at greater transparency and less variability in the associated capital requirements. Its announcement expressly stated that no significant change in overall capital requirements was expected. The U.S. approach is therefore more accurately described as a combination of regulatory relief, simplification and risk-based adjustment, while retaining key supervisory mechanisms.

For Bosnia and Herzegovina, the useful lesson is that the effectiveness of regulation must also be measured by its impact on financing the economy. U.S. solutions cannot simply be transferred to the domestic market, but they can encourage discussion about which procedures genuinely contribute to safety and which create costs without corresponding benefits.

In the assessment of AK Stevanović, there is room for improvement through proportionate requirements based on the size and risk profile of the client, simpler documentation, clear decision-making deadlines and better assessment of cash flows and contracted business. It is also important to develop transparent alternative sources of financing, with clear rules for financiers and understandable contractual terms for entrepreneurs.

If some viable business projects remain outside bank financing, the need for capital does not disappear. It may instead be redirected toward more expensive and less standardized arrangements. This is a possible consequence of an excessively rigid system that regulators and banks should take into account.

The stability of the banking system and the development of the economy must be interconnected objectives. Bosnia and Herzegovina needs regulation that preserves confidence in banks while also enabling a sound business idea, a sustainable project and demonstrable repayment capacity to receive timely financial support.