UBB starts offering loans with an option for interest subsidies under a programme of the Fund of Funds
21 April 2021
United Bulgarian Bank (UBB) starts offering loans, belonging to a new instrument under a programme, launched by the Fund of Funds (Fund Manager of Financial Instruments in Bulgaria – FMFIB). The resources under the new First Loss Portfolio Guarantee COVID-19 instrument have been provided within Innovation and Competitiveness 2014 — 2020 Operational Programme, co-financed by the European Regional Development Fund. The above financial tool will enable the preferential financing to SMEs and corporate clients experiencing hardships, triggered by the COVID-19 crisis.
The Programme provides up to 80% free of charge guarantee, while clients are going to obtain more favorable terms, as compared to standard ones. The new guarantee product will enable UBB and the Fund of Funds (FoF) to support SMEs amidst the ongoing severe crisis, by facilitating the access of businesses to loans assuring continuous operations, including coverage of their liquidity needs, as well as overcoming the financial difficulties arising from the pandemic.
UBB can potentially provide financing worth over BGN 109 million, with more than BGN 3 million interest subsidies for businesses. Companies may use this product along two lines: Investment loans with a grace period up to 24 months for repayment of the liability and working capital loans with a grace period option of up to 12 months for the principal. The maximum amount of the guarantee under the loan is BGN 2.93 million upon a guarantee period of 5 years and BGN 1.46 million upon a guarantee period of 10 years.
“Understandably, the expectations of businesses have altered. Such instruments seek to arm companies with additional solutions to meet challenges, triggered by the need for urgent adaptation, in a rapid and flexible manner, tailored to their needs”, was the comment of Mr. Peter Andronov, CEO of United Bulgarian Bank, on launching the new programme.
Mr. Aleksandar Georgiev, Executive Director of the Fund of Funds, highlighted on his part: “We believe that the experience and the expertise of UBB in the application of various guarantee instruments will facilitate the successful achievement of the goals, assuring provision of a much-needed liquidity support to the Bulgarian SMEs now”.
The interest subsidy option is an innovative element of the Programme, enabling borrowers to benefit from even increasingly preferential conditions over a 12-month period after signing the loan agreement. The subsidy targets companies, complying with the rules for obtaining de minimis state aid and the eligibility requirements, among which commitment for preservation of or increase of the company’s workforce over the interest subsidy period, Borrower’s EBITDA/profit before interest expenses, taxes, depreciation and amortization/ ratio below 4.0, etc. The interest subsidy will be applicable to new investment loans, credit lines and working capital loans involving a repayment schedule.
All loans under the Programme will have alleviated collateral requirements. Practically, the Bank's clients will be able to obtain a loan under the preferential conditions until depleting the UBB portfolio limit, guaranteed by the FoF, no later than 22 September 2022.
About the Fund of Funds
The core mission of the Fund of Funds is to structure and manage financial instruments, co-financed by the European structural and investment funds.
The Company manages public resources worth BGN 1.2 billion and offers on the market a wide range of debt, equity and quasi-equity instruments in an attempt to ensure easier access to financial resources for the private and public sector in Bulgaria while employing innovative and flexible financing tools.