Nine banks are willing to make anti-crisis loans to small and medium-sized enterprises guaranteed by the Fund of Funds (FoF) in response to the economic crisis related to the COVID-19 pandemic.
By the deadline of 17 July 2020, Bulgarian-American Credit Bank, United Bulgarian Bank, Eurobank Bulgaria, UniCredit Bulbank, First Investment Bank, Tokuda Bank, DSK Bank, Commercial Bank D and Raiffeisen Bank responded to the call. All financial institutions holding a valid banking licence and a lending authorisation were eligible to apply.
The total guarantee financing requested by the applicant banks exceeds the budget of nearly BGN 158 million designated by the FoF for this financial instrument. A list of potential partner banks eligible to sign a guarantee agreement will be ready by the end of this month. The aim is to make the new First Loss Portfolio Guarantee to Mitigate the Consequences of COVID-19 available to final recipients in September 2020.
Through its new guarantee product, the FoF will assume part of the credit risk taken by financial institutions when making new loans to small and medium-sized enterprises that are unable to put down sufficient security yet need support in the current difficult situation. This will also facilitate access to credit to enable businesses to continue operations, including to meet their liquidity requirements and/or overcome financial difficulties due to or aggravated by the pandemic.
The FoF offers a guarantee of up to 80 % of the amount of each loan, against which the respective bank will have to offer financing at preferential interest rates and reduced security requirements. The product design provides a combination of a guarantee instrument and an interest subsidy available to undertakings experiencing liquidity difficulties but nevertheless willing to retain their staff.
The First Loss Portfolio Guarantee to Mitigate the Consequences of COVID-19 instrument is financed using funds from the Operational Programme Innovation and Competitiveness (OPIC) 2014-2020.
