Who can apply for interest-free credit up of to 4.500 BGN and under what conditions?

The new programme, announced by the Bulgarian Development Bank (BDB), extends to all applicants that satisfied the conditions provided for, in a move to support the self-employed and those under an employment contract in the time of sanitary crisis and in the context of the state of emergency. The programme will be executed through commercial banks which will conclude financial agreements with the Bulgarian Development Bank (BDB).

Conditions for admissibility to the programme

For persons under employment contract

• In the absence of a reason other than the pandemic and/or the state of emergency, the applicant must have suspended its remunerated work for the employer and is on unpaid leave;

• The applicant must have been under employment contract for at least six months prior to going on unpaid leave;

• The applicant must not receive any other type of remuneration pursuant to other employment contracts;

• When the person has gone on unpaid leave during the month of March, the applicant must have worked at least five days during that month.

For self-employed persons

• As a result of the sanitary crisis and the state of emergency, the applicant has suspended their business activities as a self-employed person and/or has sustained a loss of at least 20 % of their income for the first trimester of 2020, as compared to the first trimester of 2019;

• The applicant does not receive any other remuneration by virtue on any other contract or basis.

Requirements applicable to all applicants (both employees and self-employed)

• The applicant must have paid their health insurance;

• The applicant must continue their activity; respectively return to their job, following the end of the unpaid leave.

All applicants satisfying the aforementioned conditions are entitled to receive a credit of up to 4.500 BGN through a loan agreement with a single commercial bank. The sum can be provided in instalments, each of a maximum amount of 1.500 BGN. If initially a lower total sum is applied for, it can subsequently be brought up to 4.500 BGN.

Financial terms of the loans

• 0 interest rate;

• No commissions or contractual penalties;

• Applicants do not need to provide any security as a condition for obtaining the loan;

• The loan must be paid off within a maximum of 5 years, and is afforded with a grace period between 6 and 24 months;

• The loan is paid off following the end of the grace period, through instalments, the amount and number of which are determined between the commercial bank and the applicant;

• Commercial banks have the right to modify the payment schedule within the time-period determined under the programme;

• The applicant has the right to pay off the credit before the contractual term with no additional taxes and/or commissions.

Application procedure

• The applicants apply for the loan in the bank of their choosing, by filing a funding request through a form approved by the bank;

• The applicant must provide documentation proving that it fulfils the conditions of the credit, namely:

1) a valid ID;

2) if the applicant is self-employed, document for registration with the tax administration and social security services;

3) information about the employer and the employment contract;

4) a request for credit based on a form, approved by the Bulgarian Development Bank, containing a description of the credit specifics, including total amount of the loan, the grace period and proposed payment schedule.

The following additional declarations must be fulfilled upon filing the funding request:

• For all self-employed applicants: declaration for interruption of the professional activity and/or documents proving a 20 % drop in revenue during the first trimester of 2020 (as compared with the first trimester of 2019);

• For all applicants that are employed under an employment contract: declaration attesting to the fact that the applicant is currently on an unpaid leave, as a result f the pandemic and/or state of emergency, provided that the date of beginning of the unpaid leave is after March 8, 2020;

• For all applicants that are employed under an employment contract: declaration of the applicant attesting to the interruption (whether complete or partial) of the business activity of the employer;

• Declaration attesting that the applicant does not receive any other remuneration from any other source;

• Declaration of intent attesting that the applicant intends to return to its job at the employer company (employees), respectively to reinstate its business activity (self-employed);

• Declaration according to which the applicant has paid its duties related to the national health insurance plan to the social security services;

• Declaration attesting to the fact that the applicant for the loan under the programme does not benefit from any other measure to the benefit of natural persons funded by the state in relation to the pandemic and state of emergency.

Documents are examined by the commercial bank, which verifies that all the conditions are met before granting the loan.

All commercial banks participating to the programme must mention their participation on their official websites.

A list of the banks will also be available on the website of the Bulgarian Development Bank.

The deadline for loan applications under the programme is 31 December 2020.

Author: Elena Georgieva, Attorney-at-law