Jivko Todorov, Executive Director: BDB is effective in support and development programs

Jivko Todorov, Executive Director: BDB is effective in support and development programs


The bank has taken on the role of one of the main anti-crisis instruments of the Bulgarian government, the Executive Director of BDB said in an interview for "24 Hours".


-The program in support of businesses through the BDB is expanding. What's new about it?

- As soon as a state of emergency was declared in the spring, it was necessary to ensure that businesses have access to credit and liquidity. Thus, the BDB took on the role of one of the main anti-crisis instruments of the Bulgarian government. The Guarantee program for liquidity support of the business affected by the COVID-19 pandemic had one important objective – that temporary insolvency would not lead to the permanent bankruptcy of small and medium-sized enterprises.

At the same time, it was important to assure and guarantee that lending would not stop. Therefore, the opportunity was given to the affected small and medium-sized enterprises, to take a loan guaranteed by BDB with a grace period and with reduced collateral in the amount of up to BGN 300 000. The Council of Ministers decided to expand the parameters of the program, giving a chance to a larger number of companies to benefit from it.

We have extended the application period until the end of June 2021, we have also increased the amount of the loans. Now small and medium-sized companies can receive up to BGN 1 million each and large companies - up to BGN 2 million. This will support large local producers, whose business provides employment in the regions, as well as companies, including in the tourism and transport sectors, which have so far been unable to benefit from the government measure. Under this anti-crisis program BDB continues to guarantee 80% of the amount of loans provided by commercial banks. The term of the guarantee, provided by the BDB on the loan portfolios of commercial banks will be extended by one year - from 5 to 6 years.

- How can companies apply?

- Companies must meet at least one of the conditions of the program – to have a drop in turnover after the first quarter of 2020, to have receivables from customers or to have not unpaid amounts to suppliers. Also - to have suspended import deliveries or cancelled export contracts. They may have also reduced the number of employees, closed production facilities and offices. The requirements are published on BDB's website and they remained mostly unchanged. Companies should keep in mind that it takes technical time to start accepting documents under the new conditions. Days ago, we received confirmation from the European Commission on the Temporary State Aid Framework and the changes that will enter into force in stages after the conclusion of the additional agreements with the eight partner banks that provide the loans. I hope this process will happen as quickly as possible. As for small and medium-sized enterprises, which have already taken loan of up to BGN 300,000, they can re-apply until they reach BGN 1 million.

- Which companies are eligible under the program?

- The program is open to all companies, including those from the most affected sectors such as transport, tourism, manufacturing, trade. By extending the scope of the program, any enterprise, which is struggling due to anti-epidemic measures may apply. An important mission for us is to support the export of Bulgarian goods, structurally defining and cluster-forming enterprises in the regions on which employment depends and around which an entire ecosystem of small businesses has originated, and the financing of SMEs will remain a priority, with at least 60% share in the portfolio. 

- What are the results so far?

- According to the data of the partner commercial banks, every week an average of 50 companies receive loan approval. So far, more than 1000 companies have benefited from the business program, for which BDB has confirmed guarantees on financing of more than BGN 139 million.

- Will interest-free loans be extended for people who cannot work because of epidemic measures?

- We've already introduced the changes for approval. BDB’s experts are constantly working on adapting the programs. In the first months after the launch of the programs, new needs were identified for individuals deprived of the opportunity to work. For example, some people who had returned to work from unpaid leave were still unable to cope financially after the emergency measures. Therefore, they were allowed to receive a loan after the unpaid leave. Now our experts have prepared an option where this program can be extended until 30 June 2021 and with a higher amount than the current one - BGN 6900. People who have already used the program will be able to re-apply for the difference in the amount - BGN 2400.

- What's your assessment of programs to help businesses and people so far?

- We are aware of the high expectations towards BDB and we strive to meet them. Colleagues at the bank work with tremendous responsibility and workload so that the programs can reach and benefit everyone who wants to take advantage of them. So far, commercial banks have requested approval for loans under both guarantee programs for over BGN 231 million. I hope the changes will increase banks' willingness to finance and speed up the pace of lending. We will have to deal with the difficulties in the coming months, so I expect the partner banks to continue actively utilizing the agreed limit of BGN 600 million in guarantees. On our side, I will confirm the willingness to assist and cooperate on all matters and continue the practice of approving a guarantee for each loan within 24 hours.

- How is the Bulgarian economy coping with the crisis?

- Employment data and newly registered people at labor desks are often more indicative factors of the sharpness of the crisis and addressing economic challenges than just standard gross product quantitative measures. So far, the rise in unemployment is below the EU average and far from the levels reached after the global financial and economic crisis, but also noticeably below spring expectations. The share of industrial production to that of services is relatively higher in Bulgaria than in more developed European economies, and this is a prerequisite for mitigating the negative effects. This gives us confidence that the government's package of measures and the efforts of the private sector are delivering positive result. It is also a good new that the crisis reached us with a well-capitalised and highly liquid banking system. The available buffers are substantial, the capital adequacy is higher than the European average, the share of loans in arrears and problem loans have been dramatically decreased in recent years. This gives us some optimism about the recovery period, during which the banking system in Bulgaria will be one of the main drivers of growth.

- Was BDB able to step out of the role of simply a promotional bank?

- Development banks are an effective tool of governments and an example for this is the special mandate of BDB for the implementation of the two guarantee programs. This role will also be essential after the end of the pandemic and for larger investment in the areas of health, transport, connectivity and digitalisation. The Governing Council of the BNB identified BDB as one of the eight systemically important institutions in the banking system, which can also play the role of buffers. In November, the First Global Meeting of Public Development Banks, which are about 450 around the world, took place in Paris. At this meeting, a joint declaration was adopted with a concrete roadmap and a timeline for achieving collective results – not only in terms of the development of the economy and entrepreneurship after the pandemic, but also in terms of climate and green transition. We are working in this context and therefore BDB’s new strategy, which will be submitted for approval by the Council of Ministers,is built on supporting recovery and development programs.
We have already expressed our interest to participate in the European InvestEU program, we will start to provide funding to Bulgarian companies that have approved projects under the Connecting Europe Facility, we will work to finance key infrastructure projects for transport and digital connectivity, as well as for energy diversification with the framework of the Three Seas initiative. In this sense, we do not intend to exit, but to expand the role of the BDB as a promotional bank.



fixed-button-icon Apply fixed-button-icon Online banking
Exchange rates
Interest indices
booster imager

Business Booster