News and Analysis
Fund Of Funds is launching a guarantee product for micro-crediting in support of start-ups and social enterprises
The Fund of Funds launched a competitive negotiated procedure to award a public contract for “Implementation of financial instrument: Portfolio Guarantee with capped loss on microloans”, funded by OP Human Resources Development (OPHRD) 2014–2020 and cofinanced by the European Social Fund.
The Portfolio Guarantee will cover up to 80 % of the financial intermediary’s credit risk for each microloan included in the guarantee portfolio. Potential financial intermediaries are credit or financial institutions licensed to provide credits, loans and/or leasing services in Bulgaria.
The financial intermediaries to be selected by the FoF will extend microloans to eligible final recipients, namely start-ups (including start-ups of vulnerable persons such as persons that have been unemployed for six months or more, young people up to 29 years old and disabled individuals), and social enterprises.
The BGN 20m budget of the financial instrument is divided in eight lots. The FoF expects the overall amount of microloans for eligible final recipients to reach BGN 100m, wherein the maximum loan that can be provided to an eligible recipient is BGN 97,791 (EUR 50k).
The financial instrument aims to improve access to funding for vulnerable groups of final recipients by providing financial resources at more favourable interest rates and/or loan security requirements.
The microloans will be used for the acquisition of tangible or intangible assets, for working capital in support of the development or expansion of the business carried out by the enterprise or by the self-employed individual as well as for the development and improvement of the skills of workers/employees or of the entrepreneur in the case of self-employed individuals.
The product will contribute to finding sustainable solutions in areas such as promotion of social inclusion, combatting poverty, encouragement of entrepreneurship and achievement of higher and better-quality employment.
Interested financial intermediaries can submit applications for participating in the procedure until 6.00 pm of 26 June 2019.
The full set of documents is available at http://fmfib.bg/bg/buyer/procedure/43