20.07.2023 BDB and EIB sign EUR 175 million financing agreement to support small and medium-sized businesses

The European Investment Bank (EIB) and the Bulgarian Development Bank (BDB) are joining forces to improve access to finance, promote employment and accelerate the green transition of small and medium-sized enterprises in the country.

A financing agreement worth €175 million was signed between the two institutions, which will allow long-term loans on preferential terms for small and medium-sized businesses, which are the backbone of the Bulgarian economy. Small and medium-sized enterprises account for 98% of companies in the country, produce around 60% of added value and provide 75% of employment, well above the average level in the European Union.

●The loan will support Bulgarian companies affected by the disruption in supply chains, high prices and the war in Ukraine.

●At least 20% of the financing will support the green transition, with a focus on renewable energy and energy efficiency projects.

●InvestEU guarantees through the EIF will support investments in climate resilience, innovation and digitalisation.

The ceremony was attended by Minister of Finance Asen Vassilev, Minister of Innovation and Growth Milena Stoicheva, EIB Vice President Lilyana Pavlova and BDB CEOs Iliya Karanikolov, Tsanko Arabadzhiev and Ivan Cerovski.

The loan is backed by a state guarantee approved by the Council of Ministers of the Republic of Bulgaria.

With the provided resources, BDB will support companies whose operations are affected by disrupted supply chains, high electricity prices and the consequences of the war in Ukraine. Funding can be provided both directly and through the country's commercial banks.

In line with the objectives of the European Green Pact, one fifth of the funds will be directed to support the country's green transition, with a focus on renewable energy and energy efficiency projects. The EIB will also provide BDB with advisory support for the introduction of sustainable lending under the Green Gateway project. This includes the development of tools, guidance, and training to accelerate the expansion of BDB's green finance capacity.

The InvestEU guarantee of up to €45.5 million provided through the European Investment Fund (EIF) to BDB and BDB Leasing earlier this month will also provide key support to small and medium-sized businesses. It will facilitate access to finance for riskier small and medium-sized companies, as well as for those with insufficient collateral. The agreement between the financial institutions is expected to result in loans totalling EUR 77 million over two years. The loans will be granted at preferential interest rates and will be open to companies in the innovation and digitalization sectors.

EIB Vice President Lilyana Pavlova said: "The EIB Group is pleased to further strengthen our cooperation with the Bulgarian Development Bank, our long-standing partner, and to join our efforts to support economic growth and accelerate the green and digital transition of the Bulgarian economy. Together, we are increasing access to concessional financing for businesses, thereby boosting employment, the competitiveness of the Bulgarian economy and regional development."

Paolo Gentiloni, Commissioner for the Economy, said: "SMEs are the backbone of the European economy. They play a key role in finding innovative solutions to challenges such as climate change. This agreement will deliver the necessary resources to businesses, helping them to grow and create jobs, thus continuing our support for the Bulgarian economy."

Asen Vassilev, Minister for Finance, said, "I am delighted that, as with the Jeremy programme in 2013, these funds will be able to reach small and medium-sized businesses in the form of low-interest investment loans."

"The signing of the agreement at this time demonstrates the growing confidence of European institutions in Bulgaria to build on our partnership. The concrete benefits of good and preferential financial parameters will provide anti-crisis support to companies struggling with global trends of declining liquidity and increasing financial costs," said Minister of Innovation and Growth Milena Stoicheva.

"This is the largest loan we have ever received from the EIB - further proof that the European institutions see BDB as a reliable, predictable and trusted partner. It is an excellent prerequisite for BDB to continue to fulfil its mission of supporting Bulgarian small and medium-sized enterprises," said Iliya Karanikolov, Chairman of the Board of BDB and CEO.

By renewing its work with a trusted partner such as BDB, the European Investment Fund is also continuing to support Bulgarian businesses on their journey towards green and digital transformation, said EIF CEO Marjut Falkstedt. "The InvestEU funds complement the EIB's financial and non-financial support, thus channelling significant resources to support small businesses that need it most.”

General Information

The European Investment Bank (EIB) is the EU's long-term lending institution, owned by its Member States. The EIB has worked with Bulgaria since 1992 and has supported investment projects worth over €6 billion to reduce regional development disparities and strengthen economic competitiveness. Its advisory support helps implement projects in transport, water, health, and environment.

The European Investment Fund is part of the EIB Group. It supports European SMEs by improving their access to finance through a wide range of financial intermediaries such as banks, guarantee and leasing companies, micro-credit providers and private equity funds. In Bulgaria, the EIF has contributed to mobilizing more than EUR 9.1 billion of bank finance for SMEs and mid-market capitalization companies, providing around EUR 2.7 billion, reaching some 29,000 enterprises and supporting more than 450,000 jobs.

The InvestEU programme provides the EU with key long-term financing by leveraging significant public and private funds to support sustainable recovery. It is helping to mobilize private investment for EU policy priorities such as the European Green Pact and the digital transition. The programme consists of three parts: the InvestEU Fund, the InvestEU Advisory Centre and the InvestEU Portal. The InvestEU Fund acts through financial partners who will invest in projects through a €26.2 billion guarantee from the EU budget. The entire budget under the guarantee provides cover for contractors' investment projects, increases their ability to take risks and thus attracts additional investment of at least €372 billion.

The Bulgarian Development Bank (BDB) is a lending institution 100% owned by the Bulgarian State. It was established in 1999 as a Promotional Bank whose main objective is to support small and medium-sized enterprises. BDB is among the Bulgarian banks with the highest credit rating: 'BBB' with a positive outlook by Fitch international rating agency. It is also the only Bulgarian bank that, in addition to direct financing, also provides resources through other financial intermediaries. For 24 years, the banking group has supported 24,350 companies, which have reached nearly BGN 7.3 billion through various financial instruments.