Menu

Bulgaria

Paul Hastings in collaboration withKinstellar
Liquidity Measures
Reliefs
Other

Liquidity Measures

Governmental Intermediated SME Loan Guarantee Program

Government Measure

An increase of BGN 500 m (approx. €255m) of the capital of the Bulgarian Development Bank has been used for portfolio guarantees on investment loans and working capital unsecured loans to SMEs affected by the coronavirus outbreak in Bulgaria.

The underlying loan amount per company is limited to the amount needed to cover its liquidity needs for the foreseeable future but not more than BGN 300,000 (approx. €153k).

Grace period for principal and interest up to 36 months.

The guarantees will only be granted if application is made by 23 December 2020.

The guarantees are limited to a maximum five-year duration.

The guarantee coverage for each loan is maximum 80%.

 
Eligibility

Bulgarian based SMEs1 operating in all sectors, including those most affected by the crisis, such as tourism, transport, wholesale and retail trade. meeting at least one of the following criteria (as applicable):

  • Decrease in the turnover for the first quarter of 2020 as compared to the first quarter of 2019 (based on the borrower’s interim unaudited financial statements)2;
  • Existing receivables from clients that have not been collected and/or amounts due to suppliers after 1 March 2020 (based on the borrower’s financial statements);
  • Cancelled after 1 January 2020 supplies from abroad that are necessary for the operations of the enterprise and/or cancelled contracts for export (based on certificates and documents provided by the borrower);
  • Illness or quarantine of employees, overall reduction of the employees, closed production facilities, premises, offices (based on certificates and documents provided by the borrower).

 

1Small-sized companies are those having (i) an average number of staff fewer than 50 people, and (ii) an annual turnover not exceeding BGN 19.5m (approx. €9.97m) and/or an asset value not exceeding BGN 19.5m Medium-sized companies are those having (i) an average number of staff fewer than 250 people, and (ii) an annual turnover not exceeding BGN 97.5m (approx. €49.851m) and/or an asset value not exceeding BGN 84m (approx. €42.949m).

2No guidance has been issued, but our initial view is that the turnover test will be assessed by reference to interim unaudited financial statements.

 
Supervising Authority

Bulgarian Development Bank

Further information on the terms of the program is available here (in Bulgarian only).

 

Financing is available through accredited third party lenders – commercial banks. Applications need to be made directly to the accredited lender. Several commercial banks have applied for approval of accredited third party lenders under the program.

 
Availability

Contracts with accredited third party lenders expected to be finalized by the end of May 2020 and the program to be available from that date until 23 December 2020.

Intermediated SME Loan Guarantee Program with EU funds

Government Measure

The Fund Manager of Financial Instruments in Bulgaria EAD, the entity managing financial instruments co-financed by the European Structural and Investment Funds in Bulgaria, will provide guarantees totalling BGN 170m (approx. €87m) to third party lenders that will back up a fresh loan portfolio of up to BGN 850m (approx. €435m).

Companies would be able to benefit from long-term loans of up to BGN 3.6m (approx. €1.840m) and maturity of up to 10 years mainly for working capital and investment needs arising from the coronavirus outbreak in Bulgaria.

Zero interest and long grace periods are being considered but the particular terms and requirements are yet to be announced.

Financing may be made available through accredited third party lenders.

Applications will most likely need to be made directly to the accredited lender.

Note: Aside from the above, existing fund programmes by the Fund Manager of Financial Instruments in Bulgaria EAD that have been in place prior to the COVID-19 pandemic aimed at SMEs, start-ups and small business would be further enhanced with additional funds and/or simplified approval procedures.

 
Eligibility

Bulgarian based SMEs operating in various sectors, including those most affected by the crisis, such as tourism, transport, wholesale and retail trade. Specific terms and eligibility requirements are still pending final approval.

 
Supervising Authority

Fund Manager of Financial Instruments in Bulgaria EAD.

 
Availability

Pending final approval of the terms and requirements. List of accredited third party lenders expected to be announced by the end of May 2020 and the program to be available from that date.

Sofia Municipality Intermediated Loan Guarantee Program

Government Measure

Sofia municipality will provide BGN 1,000,000 (approx. €511.3k) to the Municipal Guarantee Fund to be used for guarantees of loans provided by third-party lenders.

The guarantees will cover between 50% and 80% of the principal under a loan but not more than BGN 15,000 (approx. €7.67k) per company.

Financing may be made available through accredited third party lenders.

Applications will most likely need to be made directly to the accredited lender.

 
Eligibility

Bulgarian based SMEs operating in various sectors, including those most affected by the crisis, such as tourism, transport, wholesale and retail trade meeting the following criteria (as applicable):

  • the activity of the enterprise to be carried out on the territory of Sofia Municipality;
  • the activity of the enterprise should fall into the economic branches affected by the emergency measures introduced at national and / or regional level.

Specific terms are still pending final approval

 
Supervising Authority

Municipal Guarantee Fund

 
Availability

Measures have been approved on 23 March 2020

The availability dates and duration of the programme has not been clarified.

 

Loans to micro enterprises by Micro Financing Institution JOBS EAD (a subsidiary of Bulgarian Development Bank)

Government Measure

The product is aimed to preserve the operations and the personnel of micro enterprises.

Loans will be granted in an amount of up to BGN 48,800 (approx. €24.95k) for working capital and covering of ongoing expenses.

 
Eligibility

Bulgarian micro enterprises (those having (i) an average number of staff fewer than 10 people, and (ii) an annual turnover not exceeding BGN 3.9m (approx. €1.994m) and/or an asset value not exceeding BGN 3.9m) including legal entities; individuals working as agricultural producers or commercial operators; and agricultural cooperatives, in each case:

  • with an existing or starting business, facing liquidity difficulties due to the COVD-19 pandemic;
  • with a clear credit history (including for affiliates);
  • without overdue public liabilities (e.g. tax, social security contributions, etc.); and
  • without pending enforcement actions against them and their assets.

Security may be required in the form of:

  • promissory notes;
  • personal guarantees; or
  • guarantee under EaSi (EU Program for Employment and Social Innovation).
 
Supervising Authority

Micro Financing Institution JOBS EAD

Applications for the scheme can made by companies here (in Bulgarian only).

 
Availability

From 13 April 2020 and currently in force.

Deferred payment of annual corporate income tax for 2019

Government Measure

Deadline for declaring and paying annual corporate income tax for 2019 is deferred from 31 March 2020 to 30 June 2020.

 
Eligibility

All businesses subject to corporate income tax in Bulgaria.

 
Supervising Authority

Bulgarian National Revenue Agency

Automatic effect with no applications required.

 
Availability

Deferral period runs from 31 March 2020 until 30 June 2020.

 

Reliefs

Job Retention Scheme

Government Measure

As a measure aimed at preserving jobs in sectors affected by the COVID-19 pandemic, the National Social Security Institute will reimburse employers for 60 per cent of the amount of the income (for social security purposes) and social security contributions due on that income for employees based on both the respective amounts in the month of January 2020.

Employers benefiting from this measure are required to pay the entire monthly remuneration to the respective employees, otherwise they would have to reimburse the received amount.

This measure is available for companies active in all sectors that have reported losses in the amount of 20 per cent in the month preceding the month of the submission of the claim for payment of compensation. The reported losses will be compared to previous months.

Companies that wish to benefit from this measure should file a compensation claim with the Employment Agency together with a statement on the reduced working hours, discontinuance of work operation or the suffered loss of income. The compensation claim is reviewed by the competent decision-making committee. Where the eligibility requirements are met, the company will receive the compensation.

 
Eligibility

This measure is open for companies in Bulgaria with discontinued work operations or reduced working hours due to the state of emergency and related measures.

The relief is available for companies active in the following economic sectors:

  • Retail;
  • Transport (land, passenger , and air);
  • Hotels and leisure (restaurants, bars, pubs, cinemas, etc.);
  • Tourism;
  • Arts;
  • Pre-school and school; and
  • Sport.
Further guidance about the scheme and application forms are available here (in Bulgarian only).This measure is available also for companies active in all sectors that have reported loss in the amount of 20 per cent in the month preceding the month of the submission of the claim for payment of compensation compared to previous months
 
Supervising Authority

Bulgarian National Social Security Institute and Bulgarian Employment Agency Further guidance about the scheme and application forms are available here (in Bulgarian only).

 
Availability

For a duration from 13 March 2020 until 30 June 2020.

This may be extended as necessary

Rent for municipal and state-owned properties and municipal fees

Government Measure

The special legislation adopted in relation to COVID-19 and the state of emergency in Bulgaria allows municipal councils to adopt decisions for the reduction of or exemption from rent for municipal properties rented by affected persons and entities. Certain municipalities, including Sofia, Plovdiv, Burgas and others, have already approved such reductions or exemptions for properties, other than residential premises for two months after the lifting of the state of emergency (lifted on 14 May.2020).

In addition, some municipalities have also waived certain fees (e.g. local fees for municipal waste and for the use of sidewalks, squares and street lanes among other fees) payable in relation to municipal properties rented by affected persons and entities.

Note: A similar program may be available also for state-owned property rented to individuals or legal entities affected by the COVID-19 pandemic but for the time being no such relief has been provided.

 
Eligibility

Individuals or legal entities who have reduced or discontinued their business activity due to the COVID-19 measures imposed by the government.

Some municipalities have limited the eligibility only to persons or entities whose business activity was directly and explicitly suspended by the laws, regulations and administrative acts adopted in relation to COVID-19. Other municipalities have provided the relief to a wider group of affected persons and entities.

This application occurs with automatic effect with no applications required.

 
Supervising Authority

Respective municipalities

 
Availability

Starting date depends on the date specified in the respective municipal decision.

Generally, such relief is available during and until the state of emergency in Bulgaria is lifted. The said relief has been adopted on 9 April 2020 by the Act on the Measures and Activities during the Emergency state as a general possibility for all municipal councils to approve local relief. In compliance with this provision some of the municipal councils (Sofia, Plovdiv, Burgas) have already adopted such decisions. Thus, the relief is in place for the cities, where the municipality councils have adopted respective decisions.

Other

Suspension of negative consequences of payment default under financing agreements

Government Measure

During the state of emergency and two months after its lifting, no default interest and penalties will be due on late payments under credit agreements and other forms of financing (factoring, forfeiting, etc.) provided by banks and financial institutions, even if these have been transferred/syndicated to another bank or financial institution.

The suspension applies also to an acceleration, rescission of contracts and expropriation of assets due to payment default under such financing agreements.

 
Eligibility

All private legal persons and entities that are debtors under credit agreements and other forms of financing (factoring, forfeiting, etc.) provided by banks and financial institutions.

This relief occurs with automatic effect with no applications required.

 
Availability

Starting from 13 March 2020 until the state of emergency in Bulgaria is lifted.

Private moratoria by commercial banks

Government Measure

The Association of banks in Bulgaria has approved a common framework for deferral and settlement of obligations of borrowers affected by the COVID-19 pandemic under loan agreements with commercial banks in Bulgaria.

Three standardized mechanisms are envisaged: (i) deferral of principal and interest for up to 6 months; (ii) deferral of principal only for up to 6 months; and (iii) mechanism applicable to revolving products. The respective mechanism is agreed between the bank and the client.

Where the private moratoria standardized framework is applied to a financing agreement, it will not be treated as a non-performing loan for regulatory purposes by the Bulgarian National Bank.

Payments due may be deferred for a period of up to 6 months but not later than 31 December 2020

 
Eligibility

The framework is available to all borrowers (individuals and legal entities), other than credit institutions, who expect or already experience difficulties with servicing their loan obligations.

The framework applies to all bank loans that have closed before 31 March 2020, regardless of their type, size, purpose and established collaterals.

The deferred payments must have been regularly serviced or with a payment default of no more than 90 days as of 1 March 2020.

An application must be made by the borrower to the lender whereas each lender may specify the documents and information that they may require.

 
Supervising Authority

Respective commercial banks acting as lenders have agreed to apply the framework proposed by the association of banks in Bulgaria. The framework was prepared in compliance with the guidelines of the Bulgarian National Bank and the European Banking Authority - and is partly self-regulated by the commercial banks.

 
Availability

The framework was approved on 10 April 2020.

Applications should be made not later than 22 June 2020.

Entrepreneurship and SME Growth Capacity Grants

Government Measure

The government has provided a support measure under Operational Program "Innovation and Competitiveness" 2014-2020 for provision of gratuitous financial support to micro and small enterprises for the purpose of overcoming the economic consequences of the COVID-19 pandemic.

The aim of the measure is to provide operational capital to the targeted enterprises.

The targeted companies shall submit project proposals under Priority programme "Entrepreneurship and SME Growth Capacity".

The minimum amount of the requested grant for a project is BGN 3k (approx. €1.5k), and the maximum amount is BGN 10k (approx. €5k).

The grant procedure is implemented with the financial support of the European Union through the European Regional Development Fund. The total amount of the grant under the procedure is BGN 173m (approx. €86m).

 
Eligibility

Small and micro enterprises of all sectors may apply with projects involving activities needed to address the lack of funds or lack of liquidity resulting from the COVID-19 epidemic, including for the following types of expenses:

  • Costs for the purchase of raw materials and consumables;
  • Expenses for external services;
  • Staff costs (including remuneration costs and costs for social security and health contributions at the expense of the employer).
 
Supervising Authority

General Directorate "European Funds for Competitiveness" at the Ministry of Economy in its capacity as Managing Body of the Operational Program "Innovation and Competitiveness" 2014-2020

 
Availability

The program will be available as of 14 May 2020 until 15 June 2020.