Bulgaria: 200M leva for interest-free loans for jobless due to Covid-19

Written by on April 14, 2020 in Bulgaria - Comments Off on Bulgaria: 200M leva for interest-free loans for jobless due to Covid-19

Bulgaria’s government has approved a programme for interest-free loans of up to 4500 leva to people who lose their jobs because of the Covid-19 pandemic, the government information service said.

Collateral is not foreseen as a condition for granting the loans.

The loans will have a term of up to five years, with a minium of six and no more than 24 months grace period. No commission will be charged if the loan is repaid early.

The deadline for applications is December 31 2020.

The programme, developed by the Bulgarian Development Bank (BDB), has a budget of 200 million leva which will come from the recent capital increase of BDB.

The decision is part of the measures taken by the Cabinet to address the economic consequences of the spread of Covid-19. It aims to preserve employment and the economic well-being of workers in a situation of sharp decline in economic activity, business closures, the threat of mass bankruptcies, inter-company and public debt, the statement said.

The Cabinet also adopted another decision redistributing the contribution from the European Structural and Investment Funds by transferring funds between operational programs 2014-2020 in support of measures aimed at minimizing the negative effects of the epidemic spread of Covid-19.

Operational programs for the development of human resources and competitiveness are channeled with resources from other programs amounting to more than 233 million leva. These funds will fund temporary employment schemes and provide working capital and liquidity to small and medium-sized enterprises as a temporary response to the crisis.

In addition to the funds transferred from other Operational Programs, the Human Resources Development OP, the Innovation and Competitiveness OP and the Regions for Growth OP will also channel their internal, unallocated resources from unspent funds and those saved from ongoing operations in response to the crisis.

In this way, a financial package of European funds of over 870 million leva is being formed, which will finance measures in the field of healthcare and socio-economic character to support people and enterprises directly affected by the crisis, the statement said.

The management of Fund Manager for Financial Instruments in Bulgaria EAD, popularly known as the Fund of Funds, officially presented a new package of measures to support various business and public groups through financial instruments, Bulgarian National Television reported on April 14.

There are three main areas:

Placing a new guarantee product – a special guarantee scheme for the liquidity needs of small and medium-sized enterprises. Banks will be provided with guarantees worth 170 million leva, and they are expected to provide a portfolio of loans, which will be working capital. The possibility of interest-free loans as well as quick and easy access is being considered up this funding through the banks.

The current scheme to support the smallest start-ups and self-employed people. These may be start-ups with short or almost no business history. There will be up to 50 000 leva credit facilities for investment purposes with reduced terms and lower than market interest rates.

The Fund will continue to support municipalities and urban development projects – infrastructure, sports facilities, culture and tourism, among others.

Alexander Georgiev, Vice-Chairman of the Board of Directors of the Fund, said: “These microcredits are an alternative to the 60:40 measure, that is, we provide an alternative to financing through working capital loans to companies so that they can retain staff”.

The number of businesses to be supported and the size of the loans are very strictly dependent on European funding rules.

As to which banks would be involved, Svetlana Georgieva, Executive Director and member of the Board of Directors of the Fund , said that as an institution with a resource specifically aimed at banks “we are in constant contact with them, have intensive dialogue and receive constant feedback on the real market conditions.

“Under the specific scheme, we will enter into a dialogue with all the banks of the country.”

(Photo: Interior Ministry)

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