State rolls out 4.5bn in aid for businesses and citizens

Vladislav Goranov

Minister of Finance Vladislav Goranov presented the measures that are being taken in support of businesses and citizens at a briefing held at the Council of Ministers headquarters. The eight economic instruments devised by the government will be providing a total of BGN 4.5bn to help businesses, the self-employed, and people who have been forced to take unpaid leave because of the coronavirus crisis.

The first measure is implemented through the Bulgarian Development Bank (BDB) and allows clients to take out interest-free loans of up to BGN 4,500. “This is geared towards the people who have been deprived of means to earn a living because of the epidemic,” the finance minister explained. Eligible to apply under this measure are individuals who are on unpaid leave specifically because of the consequence of the Covid-19 pandemic. Applicants must have worked at least five days in March if that is the month they were forced to take unpaid leave. Another requirement is for the applicants to prove at least 20% drop in their income. At present, 12 banks have expressed interest in participating in the programme. There is a grace period of up to 24 months, and the loans have to be paid off within five years of being taken out. There are no fees or commissions and borrowers have the option to repay the loan ahead of schedule without getting penalised for it. The application deadline is the end of 2020, and Goranov believes that more commercial banks will join the programme by then.

The second instrument concerns emergency funding for small and medium-sized enterprises (SMEs). This scheme aims to provide unsecured loans of up to BGN 300,000 for covering operating expenses and it, too, will be managed by the BDB through commercial banks. “The portfolio of loans expected to be extended under this instrument can reach a total value of BGN 2bn,” Goranov said. To qualify for the programme, companies have to show a dip in business for the first quarter of 2020, pending client claims, outstanding payments to suppliers past 1 March, and a reduction in the number of people on the payroll. Applications may be filed by the end of 2020. “I anticipate that a significant number of micro, small and medium-sized enterprises will be able to take advantage of this programme,” Goranov commented.

Loans capped at BGN 3.6m will also be extended to SMEs through the European Investment Fund via banking partners. Liabilities incurred within the last 60 days can be refinanced. The total budget is BGN 160m.

The Fund of Funds will be providing micro credits of up to BGN 50,000, once again in support of SMEs. A grace period of up to 24 months and subsidised below-market interest rates are options. The maximum term of the loans is 10 years, while the instrument has a capacity of BGN 24m. The programme is now available through providers like First Investment Bank and two other financial intermediaries. Goranov says that he is working together with the Ministry of Labour and Social Policy on turning this particular instrument into interest-free lending.

The finance minister also presented a capital investment instrument managed by the Fund of Funds. The funding is intended for companies that could potentially restore the economy in the aftermath of the crisis, especially in the field of digitalisation - startup companies. According to Goranov, the average investment will be about BGN 800,000, based on past numbers.

Urban development funds can channel funding towards operations that are not considered lucrative enough to be funded through banks. The maximum amount available to any single applicant is BGN 40m, while the entire budget of the instrument is BGN 418m. The end recipients are municipalities, public-private partnerships, and enterprises affected by the crisis. The most devastated sectors of the economy such as tourism and transport can take advantage of this particular instrument.

“The amount of resources that we are devoting is in the billions and my hope is that the assistance reaches beneficiaries as soon as possible,” Goranov said. Videos explaining how the various instruments work are being prepared and should be ready in a matter of days. The finance minister urged the media to air them for free.

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