Bulgaria launches $1.55 bln guarantee scheme to support small businesses

Bulgaria will launch a new 2.5 billion levs ($1.55 billion) guarantee scheme to help small and medium businesses get bank loans and speed up its economic recovery, interim Economy Minister Kiril Petkov said on Friday.

Bulgaria’s small and open economy was hit hard by restrictions aimed at containing the novel coronavirus, contracting by 4.2% last year. The finance ministry expects the economy to grow 2.7% this year and return to pre-crisis levels in 2022.

Under the new scheme, the state will cover 50% of the banking risk, allowing commercial banks in the country to extend loans to small companies equal to 70% of their revenues in 2019 or 2020 without collateral.

Companies which have operated for at least three years will be eligible to apply for 7-year loans and receive the funds within 10 days, Petkov said.

“For us, it is essential to bring new working capital in the small and medium business and boost their competitiveness,” Petkov told reporters.

Petkov said Bulgarian commercial banks have excess liquidity but are wavering on extending loans, especially to companies hit by the pandemic. The new scheme, agreed with the European Commission, will help boost lending, he said.

“With this scheme we are untying banks’ hands to extend loans which they were afraid to,” Petkov said.

The Balkan country also plans to expend job supporting schemes for businesses until the end of July.

($1 = 1.6145 leva)

Photo: A woman wearing a face mask walks in Sofia, Bulgaria. EPA-EFE/VASSIL DONEV