Bulgarian Development Bank signed a five-year funding agreements with six credit institutions. It will lend to small and medium enterprises. For the BDB the contracts were signed by its chief executive Assen Yagodin. For Unicredit Bulbank the agreement was inked by its Chief Executive Officer Mr. Hampartzoumian. Societe Generale Expressbank was presented by Executive Director Maria Rousseva, while for Allianz Bank Bulgaria signature was of the Eexecutive Director Nikola Bakalov, Unionbank was presented by Chief Executive Maria Ilieva, ProCredit Bank – by its Executive Director Peter Slavov and the Municipal Bank – by its Executive Director Sasho Chakalski. By early April, a similar agreement is expected to be signed between BDB and DSK.
BDB grants to these banks a financing of a total of BGN100 million at a fixed annual rate of 4%, and they on their turn undertake to provide it in loans to SMEs with an annual interest of not more than 7 percent. Fees and commissions on lending to small and medium-sized enterprises should not exceed 0.5% of the size of the loan. The maximum size of a single credit is limited to BGN2 million.
The current initiative allows banks to finance small and medium businesses with a relatively favourable conditions – all the costs of such a loan payable by companies pay do not exceed 7.5%. The real challenge for banks in this case is to find enough creditworthy companies that in the same time may need to borrow money, said CEO of BDB Assen Yagodin. He did not hide that, according to most of his peers the majority of applicant borrowers are companies with financial problems, that are not at all sure whether they can handle the repayment of loan – irrespective of the low costs.
According to information provided by the BDB the credit line is too small in volume to be in position to cause a sharp drop in interest rates on corporate loans as a whole, but a good signal to businesses who have potential for further development.
