200 Million Leva for SMEs

Bulgarian Development Bank (BDB) had secured 200 million leva that it hoped to lend to small and medium-sized enterprises (SMEs) by the end of the year, Bulgarian newspaper Capital reported, quoting top bank officials.

 

“This is part of our budget goals for this year and we are ready to lend this resource to SMEs, provided there is interest,” the newspaper quoted Andrei Genev, a member of BDB’s board of directors, as saying.

 

So far, however, Bulgarian businesses were wary of pursuing new investments and were showing little interest in trying to contract new loans. As a consequence, the applications received by the state-owned lender were of “poor quality”, while companies in good financial standing that could successfully secure the financing had temporarily frozen all new investment, the bank said.

 

Earlier this year, BDB signed a credit line agreement with six banks to lend on 100 million leva to Bulgarian businesses, but that offer has drawn only limited interest as well. Only one third of the funds have been lent on, with companies reluctant to jump on despite the low interest rate – fixed at seven per cent for the entire maturity of the loan (no longer than five years).

 

In its direct lending to SMEs, BDB would not compete with commercial banks by offering lower interest, but it would offer a longer repayment period – 10 years. The minimum amount that can be contracted is 250 000 leva, according to Capital’s report.

 

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