Bulgarian Development Bank (BDB) prepared changes to the guarantee program to support small and medium-sized businesses affected by the COVID-19 pandemic. They expand the scope of the government measure, allowing more companies from the sectors most affected by the pandemic to benefit from it. With the decision of the Council of Ministers of October 28, 2020, the amount of loans guaranteed by BBR increases, which will now be able to reach BGN 2 million. The application deadline is extended by 6 months, until mid-June 2021. Among the eligible companies are already large enterprises that are registered as commercial companies in the country.
BDB guarantees 80% of the amount of the loans, and the percentage is maintained even after the approved changes. However, in order to increase their propensity to lend, as well as to be able to reduce the amount of interest on loans, the partner banks have the right to require collateral in the amount of up to 50% of the value of the loans they negotiate.
With the adopted changes to the program, enterprises with more than 250 employees, as well as those with an annual turnover of more than BGN 97.5 million or with an asset value of more than BGN 84 million, will now be able to apply. In this way, access will be granted to a liquid resource and for larger enterprises, including in the field of tourism and transport, which until now were outside the scope of the government measure. It will also support larger local manufacturers, whose business provides employment for entire regions of the country.
The priority in the program remains the financing of SMEs, and the minimum quota will be at least 60% from the formed loan portfolios.
The absolute maximum amount of loans to one and related persons is also increased from BGN 300,000 to BGN 1 million for SMEs and to BGN 2 million for large enterprises, which, however, must be commercial companies within the meaning of the Commercial Law. Under the program, the financing of associations and so-called companies will not be admissible.
Among the essential improvements in the mechanism is the possibility of granting a financial resource for investments, not only for working capital.
An increase in the limit of guarantee payments by BDB to commercial banks under the program (CAP) from 30% to 50% is foreseen.
The deadline for applying for financing will be extended by 6 months - companies can submit requests to commercial banks until 20.06.2021. The term of the guarantee provided by the BDB on the loan portfolios will also be extended by another year. This will allow further improvement of loan payment schemes – from 5 to 6 years.
The BDB also plans to ease the process for establishing the difficult situation of companies during the corona crisis, reducing the requirements for the utilization of funds under revolving loans, as well as simplifying the procedure for presenting payments under the guarantee provided by the BDB. The existing loans that will be included in the portfolio guaranteed by BBR will now have a longer grace period - until 30.06.2021.
The changes will enter into force after the approval of the European Commission and after the signing of additional agreements with each of the commercial banks-partners of the program.
The program for portfolio guarantees to support the liquidity of SMEs, which suffered from the emergency situation and the COVID-19 pandemic, was launched as an anti-crisis measure in May 2020. So far, its partners are 8 commercial banks that grant loans of up to BGN 300 thousand for companies with a decline in turnover, laid off staff, closed production premises and offices, with unpaid receivables from customers and unpaid sums to suppliers.
To date, 643 companies have benefited from the program, for which BBR has confirmed financing guarantees in the amount of BGN 90.7 million. The enterprises are in some of the sectors hardest hit by the pandemic: trade, tourism, production and transport.