Shorter loan approval time under BDB’s renewed guarantee program in support of businesses

Shorter loan approval time under BDB’s renewed guarantee program in support of businesses

The new conditions are part of the Recovery Program developed by the Ministries of Economy and Finance to overcome the effects of COVID-19

The Bulgarian Development Bank will offer shorter loan approval time and reduced collateral requirements under its guarantee program in support of businesses affected by the COVID-19 pandemic. The changes in the anti-crisis measure were approved by a decision of the Council of Ministers and will enter into force after a positive opinion from the European Commission.

Companies will now have information on whether they are approved for a loan within five business days after providing all the necessary documents, and the funds will be available to use within ten business days. To receive financial support under the program, companies must have at least three complete financial years, with at least one of them ended with a profit.

Micro, small and medium-sized businesses from all economic sectors can benefit from this guarantee instrument. The condition is for them to have their economic activities and place of registration in the Republic of Bulgaria and to suffer adverse economic consequences from the spread of the pandemic.

The maximum funding will now be up to BGN 3 million, regardless of the size of the business, and BDB will cover up to 80% of the loan principal under the terms and conditions of the program. The loan repayment period is up to seven years with a possible grace period of up to three years.

The partner commercial banks in the program will require as collateral personal guarantees from the business owners, as well as, if applicable, pledges of collections from accounts under the Obligations and Contracts Act (OCA), the Special Pledges Act (SPA) and through a financial collateral arrangement under the Financial Collateral Arrangements Act (FCAA).

The final date to apply for BDB’s renewed guarantee program is December 20, 2021.

The changes approved by the government aim to synchronize the program with the upgrading intervention mechanism for liquidity support for businesses in the country, developed in May by the Ministry of Economy and the Ministry of Finance, called Portfolio Guarantee to Overcoming the Effects of COVID-19 (the "Recovery Program“).

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