First Loss Portfolio Guarantee (FLPG)

FLPG stands for First Loss Portfolio Guarantee instrument. The purpose of this financial instrument is to stimulate bank lending to Micro, Small and Medium-sized Enterprises (SMEs) by providing credit risk protection (in the form of a first loss portfolio capped financial guarantee) in order to reduce the particular difficulties that SMEs face in accessing finance because of the lack of sufficient collateral in combination with the relatively high risk they represent.

The overall budget of the instrument allocated under JEREMIE in Bulgaria is an amount of EUR 78.4 million. As the instrument requires the Financial Intermediaries (FI) to contribute resources five times larger than the public funds allocated, the total budget coupled with the private contribution equals EUR 392 million.

Key Terms

The main objective of the instrument is to provide credit risk protection to the Financial Intermediaries translating into preferential conditions for the SMEs obtaining loans. The preferential conditions may vary between Financial Intermediary, industry, SME, loan purpose, maturity and other parameters. The key terms of the instrument are as follows:

Preferential conditions: Reduced collateral requirements, interest rate and associated fees & taxes on the loans extended.
Maximum loan amount: Up to EUR 1.875 million.
Guarantee level: Up to 80% of each loan included in the Financial Intermediary’s portfolio.
Loan Purpose: Investment and / or working capital.
Maturity: up to 120 months (10 years) with the possibility of a grace period.

Eligibility Conditions:

  • The borrower must be registered under the Commerce Act of Bulgaria
  • The borrower must be an SME;
  • The borrower must not be a “firm in difficulty”;
  • The borrower or the transaction to be financed must not be operational in the sectors stipulated by Article 1, paragraphs 1 of Reg. 1998/2006;
  • Furthermore, investments are subject to restrictions in relation to SMEs active in the following sectors:
     
       1. Arms production and trading;
       2. Gambling;
       3. Tobacco;
       4. Human cloning;
       5. Genetically Modified Organisms.

Note: Re-financing of an existing loan is not permitted through this instrument.

Selected Financial Intermediaries
EIF has signed 5 Guarantee Agreements with five Bulgarian banks totalling
loans of EUR 392 million in July 2011. Since then, CIBank, ProCredit bank, Raiffeisen bank, Unicredit Bulbank and United Bulgarian Bank have been extending loans with preferential conditions to the SMEs. The respective eligibility requirements and contact details of each bank are presented below:

 
 

CIBANK

Contacts:
Tel: (02) 90 29 144 / 157 / 263 / 309
Web: CIBANK JEREMIE Loans 
 

 

 

 

 

 

ProCredit Bank (Bulgaria)

Contacts:
Tel: +(359) 700 1 70 70 
E-mail: contact@procreditbank.bg
Web: ProCredit JEREMIE Loans  

 

 

 

 

  

Raiffeisenbank (Bulgaria)

Contacts:
Tel: +(359) 2 91 985 101
E-mail: rbbg.smemail@raiffeisen.bg, rbbg.allocations@raiffeisen.bg
Web: Raiffeisen JEREMIE Loans   
 

 

 

Unicredit Bulbank

Contacts:
Daniel Enchev, Kiril Stoychev
Tel: +(359) 2 923 25 77 / 23 80
E-mail: ecc@unicreditgroup.bg
Web: JEREMIE Loans by UniCredit Bulbank 
 

 

 

United Bulgarian Bank
Contacts:
Telephone: 0700 117 17
Web: UBB JEREMIE Loans

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Acceleration & Seed Fund

The purpose of this financial instrument is to support Small and Medium-sized Enterprises (SMEs) at their seed and start-up stage by providing funding in the form of either equity or quasi-equity in order to enhance the access to financing to emerging entrepreneurs as well as to streamline the transition to a knowledge-based economy in Bulgaria. The budget of the instrument is EUR 21 million entirely coming from the JEREMIE Holding Fund (JHF).

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Risk Capital Fund

Innovative Micro, Small and Medium-sized Enterprises (SMEs) in the technology sector in their early and growth phases of company development frequently have difficulties finding capital providers to help them grow, as they are often considered too risky. The Risk Capital Fund provides the funding source needed to finance such companies in order to foster innovation and stimulate the knowledge-based economy.

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Portfolio Risk Sharing Loan (PRSL)

The purpose of this financial instrument is provide loans with low interest rates to  Micro, Small and Medium-sized Enterprises (SMEs) in order to reduce the particular difficulties that SMEs face in accessing finance resulting from the mismatch between  interest rate levels requested from the banks and the ones  businesses could afford to pay. 

The overall budget of the instrument allocated under JEREMIE in Bulgaria has an initial amount of EUR 150 million. As the instrument requires the Financial Intermediaries (FI) to match the resources provided by public funds, the total budget coupled with the private contribution equals EUR 300 million.

Key Terms

The resource provided through the JEREMIE initiative will bear an interest rate of 0%, which the participating banks are contractually required to transfer to the SMEs. Therefore each loan extended under the initiative will comprise of 50% funding provided under the PRSL product at 0% and 50% funding provided by a bank at market rate, thus decreasing the interest rate level to the SMEs by at least in half.

The key terms of the instrument are as follows:

Preferential conditions: Interest rate levels decreased by at least 50% from the standard levels of the bank; reduction in the requested collateral, reduction in the  fees & taxes on the loans extended.

Maximum loan amount: EUR 2 million (subject to compliance with State-aid rules).

Interest rate level reduction: 0% interest rate on the part loan funded through PRSL (i.e. 50% of each loan extended under the product); potential further reduction on the interest rate level of the loan portion financed by the bank.

Loan Purpose: Investment and / or working capital.

Maturity: up to 120 months (10 years) with the possibility of a grace period of up to 24 months or 1/3 of the loan term.

Eligibility Conditions:

  • The borrower must be registered under the Commerce Act of Bulgaria
  • The borrower must be an SME;
  • The borrower must not be a “firm in difficulty”;
  • The borrower or the transaction to be financed must not be operational in the sectors stipulated by Article 1, paragraphs 1 of Reg. 1998/2006;
  • Furthermore, investments are subject to restrictions in relation to SMEs active in the following sectors:
     
       1. Arms production and trading;
       2. Gambling;
       3. Tobacco;
       4. Human cloning;
       5. Genetically Modified Organisms.

Note: Re-financing of an existing loan is not permitted through this instrument.

Selected Financial Intermediaries (banks) 

EIF has signed four Funding Agreements with five Bulgarian banks for a total resource of EUR 310m (EUR 155m JEREMIE contribution) in 2012 and 2013. Since then, Allianz Bank, First Investment Bank, ProCredit Bank, Societe Generale Expressbank and UniCredit Bulbank have been extending loans with significantly reduced interest rate conditions to the SMEs. The respective contact details of each bank are presented below:

 

Allianz Bank Bulgaria

Contacts:
Tel: 0800 13 014

Email: support@bank.allianz.bg
Web: Allianz JEREMIE Loans 
 

 

First Investment Bank

Contacts:
Tel: (02) 800 28 78/ 28 76/ 2915 
Web: FIB JEREMIE Loans   
 

 

ProCredit Bank (Bulgaria)

Contacts:
Tel: +(359) 700 1 70 70 
E-mail: contact@procreditbank.bg
Web: ProCredit JEREMIE Loans  

 

 

                                                         

Raiffeisenbank (Bulgaria)

Contacts:
Tel: +(359) 2 91 985 101
E-mail: rbbg.smemail@raiffeisen.bg, rbbg.allocations@raiffeisen.bg
Web: Raiffeisen JEREMIE Loans   

 

 

Societe Generale Expressbank
Contacts:
Telephone: 0800 18 888
Web: JEREMIE Loans

 

Unicredit Bulbank

Contacts:
Daniel Enchev, Kiril Stoychev
Tel: +(359) 2 923 25 77 / 23 80
E-mail: ecc@unicreditgroup.bg
                                                           Web: JEREMIE Loans by UniCredit Bulbank 
 

 

 

 

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Calls for Expression of Interest (EoI)

Financial Intermediaries (FIs) providing finance to the final beneficiaries – Micro, Small and Medium Enterprises (SMEs) under the JEREMIE Initiative are selected via open Calls for Expression of Interest.

Open Calls for Expression of Interest (Eol):

Closed Calls for Expression of Interest (Eol):

  • Call for Expression of Interest No. JER-009/1 to select Financial Intermediaries that will receive resources from the JEREMIE Holding Fund for Bulgaria to implement the following Financial Instrument: Risk Capital Fund(s)
  • Call for Expression of Interest No. JER-009/2 to select Financial Intermediaries that will receive resources from the JEREMIE Holding Fund for Bulgaria to implement the following Financial Instrument: First Loss Portfolio Guarantee (FLPG)
  • Call for Expression of Interest No. JER-009/3 to select Financial Intermediaries that will receive resources from the JEREMIE Holding Fund for Bulgaria to implement the following Financial Instrument: Growth Capital Fund(s)
  • Call for Expression of Interest No. JER-009/4 to select Financial Intermediaries that will receive resources from the JEREMIE Holding Fund for Bulgaria to implement the following Financial Instrument: Mezzanine Fund(s)
  • Call for Expression of Interest No. JER-009/5 to select Financial Intermediaries that will receive resources from the JEREMIE Holding Fund for Bulgaria to implement the following Financial Instrument: Entrepreneurship Acceleration and Seed Financing Instrument
  • Call for Expression of Interest No. JER-009/6 to select Financial Intermediaries that will receive resources from the JEREMIE Holding Fund for Bulgaria to implement the following Financial Instrument: JEREMIE funded Financial Instrument with an embedded risk sharing element
  • Call for Expression of Interest No. JER-009/7 to select Financial Intermediaries that will receive resources from the JEREMIE Holding Fund for Bulgaria to implement the following Financial Instrument: Co-Investment Fund(s) 
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About Jeremie

JEREMIE (Joint European Resources for Micro to Medium Enterprises) is a joint initiative launched by the European Commission (Directorate-General Regional Policy) and the European Investment Bank (EIB) Group to improve access to finance for Micro, Small and Medium-sized Enterprises (SMEs) in the EU within the Structural Funds framework for the period 2007 – 2013. JEREMIE offers the EU Member States, through their national or regional Managing Authorities, the opportunity to use part of the resources made available from the EU Structural Funds and also national resources into Holding Funds. The JEREMIE Holding Fund provides finance to SMEs in a flexible, sustainable and innovative way, by providing equity, (micro) loans or guarantees financial instruments through selected local financial institutions acting as European Investment Fund (EIF) intermediaries.

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About Jeremie Bulgaria

In Bulgaria, the JEREMIE Holding Fund (JHF) is financed by the European Regional Development Fund (ERDF) and co-financed by 15% by the State Budget within the framework of the Operational Programme (OP) “Development of the Competitiveness of the Bulgarian Economy 2007 – 2013”. Under this OP, the Ministry of Economy, Energy and Tourism (MEET), has allocated contributions under the Priority Axis 3, including a national contribution, equal to EUR 349 million for the implementation of the JEREMIE Initiative aiming to improve the access to finance for Small and Medium-sized Enterprises (SMEs) through various financial engineering instruments.

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