Background information

The government has introduced a new recovery program called "Fund of Funds". The purpose of the program is to give businesses access to loans to help with the resumption of activities after the gradual abolition of COVID-19 protection measures. This allows businesses to gain access to financial resources to meet current liquidity needs, to support investments, and continue processes of transformation and growth.

Content of measure

Small and medium sized Bulgarian enterprises are eligible for this program.

The program includes:

• Wide access to business loans without material security requirements and unsecured credit, except for personal guarantees provided by the owners.
• Potential to obtain approval and opportunity for absorption in a short time.
• Opportunity to negotiate a 12-month grace period.
• Deferment of payment up to 84 months.
• Ensure maximum possible clarity and minimise the administrative burden for the client.
• Opportunity to receive funding up to BGN 3 million.

Financial intermediaries for the program are: Tokuda Bank, First Investment Bank, Unicredit Bulbank, Raiffeisenbank, Postbank, UBB and DSK bank. The status of the measure is currently active and there is no deadline (until the funds run out).

The budget for this measure is BGN 157.9 million of public resource funds. The source of these public resource funds are: Operational Program "Innovation and Competitiveness" 2014 - 2020, co-financed by the European Regional Development Fund.

The funds were redirected from the financial instruments "Small Business Financing" and "Portfolio Guarantees with a Loss Ceiling for Energy Efficiency and Innovation.

Use of measure

As of 30 June 2022 BGN 396.6 million have been disbursed to final recipients, of which BGN 19.6 million have been repaid, 1,079 companies were supported with a total of 1,130 loans. BGN 163.6 million is the total guarantee issued and BGN 453.6 million is the total agreed amount of credits. Of the BGN 453.6 million contracted with final recipients, BGN 86.0 million (19%) is for investment loans and BGN 367.7 million (81%) is for working capital loans.

Micro-enterprises are supported with investment loans and small enterprises are supported with working capital. The average loan amount is BGN 402,000, however loans range from BGN 5,000 to BGN 3.6 million.

According to Recovery Programme Implementation Report as of July 2022, the main economic activities supported were: Road transport, retail trade in non-specialised stores mainly of food, beverages and tobacco products, construction of residential and non-residential buildings, retail trade of automotive fuels and lubricants materials, wholesale of grain, seeds, feed and unmanufactured tobacco (30pc) and restaurants and food service activities.

Target groups

Workers	Businesses	Citizens
Does not apply to workers	SMEs	Does not apply to citizens

Actors and funding

Actors	Funding
National government Company / Companies	European Funds National Recovery and Resilience Facility

Social partners

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

	Trade unions	Employers' organisations
Role	Informed	Informed
Form	Not applicable	Not applicable

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

• No involvement
• Main level of involvement: Unknown

Involvement

The measure was not consulted with the social partners, either formally within the National Council for Tripartite Cooperation or informally in the form of tripartite or bipartite meetings. The social partners were simply informed of the cabinet's intention in this direction. The main correspondence and exchange of remarks was through the media.

Views and reactions

Business organisations did not support the measure, as they demanded more grants at the expense of loans. According to their analysis, there are enough credit lines on the Bulgarian market for which there is no demand. In addition, the affected SMEs will not meet the requirements of commercial banks, thus not having access to finance for those most affected. The unions also did not support the measure and demanded more grants and fewer loans.

Sources

• 04 July 2021: Правителството обяви нови мерки за подкрепа на бизнес (www.economic.bg)
• 06 February 2022: Recovery Program (bbr.bg)
• 01 July 2022: Recovery Programme Implementation Report (www.fmfib.bg)