The Bulgarian Development Bank AD (BDB) and the European Investment Fund (EIF) have signed a Guarantee Agreement on February 13, 2009 for the establishment of a guarantee line in the amount of up to EUR 60 million. Thus, BDB has become the first financial intermediary of the EIF in Bulgaria under the European Communities’ Competitiveness and Innovation Framework Programme for SME (CIP 2007-2013). This is the BDB’s second guarantee line signed with the EIF, and long-term loans for over EUR 42 million have been extended under the first one.
Within the framework of the agreement signed in 2009, projects for a minimum amount of EUR 80 million could be funded by the Bulgarian Development Bank AD under reduced collateral requirements because of the partial risk coverage by the EIF. The signing of the guarantee line will facilitate the access of SMEs (with less than 100 employees) to medium- or long-term financing.
The guarantee line shall cover investment and working capital loans under the following programmes of the Bulgarian Development bank AD: Long-term investment loans, Eurostandard, Health care, Enhancement of Competitiveness, Family business, High technologies, Northern Business Initiative, Financing of agriculture, Investment loans to SMEs. The minimum term of the loans eligible to be guaranteed is 18 months, and the maximum one is up to 10 years. The grace period under the loans varies from 1 up to 3 years.
The type of the guarantee provided by the EIF and the European Commission under the Competitiveness and Innovation Framework Programme is direct. Loans of up to EUR 500,000 and extended under the abovementioned programmes are eligible for financing. The inclusion period of the guarantee line is 13 February 2011.
The European Investment Fund is an institution which primary mission is to support the establishment, growth and development potential of small- and medium-sized enterprises. The main shareholders of the EIF are: the European Investment Bank with 64% and the European Union, represented by the European Commission with 27% respectively.
http://www.eif.org/guarantees/news/2009_CIP_Guarantee_deal_in_Bulgaria.htm.
