Background information

The state-owned Bulgarian Development Bank (BDB) received BGN 700 million (approximately €350 million, 0.6% of 2019 GDP) capital increase, of which BGN 500 million (€250 million) shall be used for the issuance of portfolio guarantees to commercial banks for the extension of corporate loans.

The rest BGN 200 million (€100 million) are to back up bank loans for workers and self-employed.

Bulgarian Development Bank is a financial institution owned by the Bulgarian state. It was established in 1999 as the Encouragement Bank with main focus to support small and medium-sized enterprises.

Content of measure

The Bulgarian Development Bank will provide access to finance to support the turnover and activity of small and medium-sized enterprises affected by the COVID-19 pandemic. The aim is to minimise the risks of liquidity crisis and preventive business support, including through risk sharing with commercial banks in the country.

BDB will create a portfolio guarantee scheme worth BGN 500 million (€250 million), which will be able to guarantee loan portfolios for about BGN 2.5 billion (€1.25 billion) at commercial banks. This will provide an instrument for banks to support on the most affected businesses in the crisis: companies in the trade, services, including transport, tourism, hospitality, restaurant, logistics and export companies.

Under this support programme, BDB guarantees loans of up to BGN 300,000 (€150,000) to small and medium-sized enterprises, which are suffering negative consequences of the pandemic. Loans are granted by partner banks with reduced collateral requirements and the possibility of a grace period of up to 3 years.

All companies can apply for the measure, as long as they meet the individual conditions that each commercial bank requires. The conditions are strictly individual and may vary for each company according to the financial position and debt of that company.

Use of measure

In July 2020, it was announced that the BDB has only deployed BGN 9 million (€4.5 million) as portfolio guarantees to commercial banks for support and extension of corporate loans.

As of November 2020, 929 companies have received bank loans under the business support guarantee of BBD. The total amount of supported credits for business is of about BGN 113 million (€55 million).

Together with the credit guarantees for individuals, the BDB has guaranteed loans in total worth of about BGN 213 million (€105 million).

Оnly 1% of all Bulgarian companies have been backed up by the credit guarantee support. Another 4% are analysing their benefits with the scheme. Around 27% of the surveyed companies say they are not able to profit from the measure.

As the measure has not be proven to be very successful in the beginning of the pandemic, some part of the money has been redirected to SMEs grant measures in July 2020. However, the interest for the measure is increasing over time and the total sum of supported credits rises.

As of 20 January 2021 the value of the confirmed loans for small and medium-sized companies is a little over €79 million. The most serious is the interest from the sectors of trade and tourism, production and transport. Among the supported are also companies in the field of construction, agriculture, services and advertising.

Target groups

Workers	Businesses	Citizens
Does not apply to workers	Applies to all businesses	Does not apply to citizens

Actors and funding

Actors	Funding
National government Company / Companies Other social actors (e.g. NGOs)	National funds

Social partners

Social partners' role in designing the measure and form of involvement:

	Trade unions	Employers' organisations
Role	No involvement as case not in social partner domain	No involvement as case not in social partner domain
Form	Not applicable	Not applicable

Social partners' role in the implementation, monitoring and assessment phase:

• Only employers' organisations
• Main level of involvement: Peak or cross-sectoral level

Involvement

The Bulgarian Industrial Association (BIA) is analysing the demand for business credits. BIA representatives together with representatives of the Ministry of Economy, Bulgarian Development Bank and other representatives of employers' organisations have discussed the BDB measures during an online meeting in November 2020.

Views and reactions

The social partners were not involved in any way in the preparation of the measure. It was the sole decision of the government in the context of measures that applied to all other economies.

As of November 2020, The Bulgarian Industrial Association (BIA) is carrying out an online survey among Bulgarian business on the COVID-19 policies and support programmes and their efficiency. Official results and statements will be published in mid December 2020.

Sources

• 26 March 2020: Прекият ефект от правителствените мерки през банката се оценява на над 2% от БВ (www.economic.bg)
• 06 April 2020: ЗИД на ЗДБРБ (parliament.bg)
• 16 April 2020: Министерство на финансите на Република България (www.minfin.bg)
• 28 July 2020: About BGN 200 million of BDB's money will be redirected to grants for companies (www.capital.bg)
• 29 October 2020: The scope of the BDB guarantee program in support of business is expanding (bbr.bg)
• 10 November 2020: Loans for over BGN 213 million have been approved by BDB under its guarantee programmes. © Actualno.com (www.actualno.com)
• 13 November 2020: Only 1% of companies are interested in anti-crisis measures (www.pariteni.bg)
• 20 January 2021: ББР одобри кредити за над 268 млн. лв. по двете антикризисни програм (www.investor.bg)
• 06 February 2022: Recovery Program (bbr.bg)