Summary of the activity of JEREMIE in Bulgaria in 2014.

Key highlights of 2014:

  • EUR 628 million of loan and equity investment portfolio committed to more than 6,247 Bulgarian SMEs by end-2014, translating into a leverage ratio of 1.8x for each 1 EUR of public funds contributed through the JEREMIE Initiative.
  • More than 7,300 individual SME financing operations supported.
  • Absorption of JHF funds stood at 71.5% as of end-2014 – the totality of the JHF funds has been committed to operations.
  • In 2014, the SME lending activity under the Portfolio Risk Sharing Loan (PRSL) further accelerated with 86% growth of signed SME loan amount YoY. A total of EUR 317m was committed to 2,177 SMEs representing 81% of total budget of the instrument.
  • Close to full absorption of the original budget of the First Loss Portfolio Guarantee product, together with high market demand by SMES, led to a decision to allocate additional EUR 12m of JHF resources to the instrument in 2014 that along with leverage effect of 5 times is expected to provide additional EUR 60m of guaranteed SME loans in the course of 2015.
  • Further negotiations for a financial commitment to the Mezzanine Fund instrument were suspended due to shortening of the prospective investment period; the original budget of EUR 30m for the instrument was reallocated to other operations with financial intermediaries in JHF portfolio.
  • Effective start of the two equity funds under the Co-Investment Fund(s) instrument brought the number of equity operations to five in total.
  • On 24th of October, 2014 the Government of the Republic of Bulgaria, represented by the Ministry of Economy and Energy and EIF signed an extension of the term of EIF mandate for management of JEREMIE Holding Fund beyond the original deadline 31st of December, 2015. Under the Third Amendment Agreements of the Framework and Funding Agreements, which are set to enter into force on 30th of June, 2015, EIF will continue to act as a sole shareholder of JEREMIE Bulgaria and to manage the portfolio of underlying operations for the benefit of the Republic of Bulgaria until 31st of December, 2025.
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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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