The European Commission has approved a Bulgarian 500 million leva (about 255 million euro) public guarantee scheme to support small and medium-sized enterprises (SMEs) in the context of the coronavirus outbreak, the Commission said.
The scheme was approved under the State aid Temporary framework adopted by the Commission on March 19, as amended on April 3.
EC Executive Vice-President Margrethe Vestager, in charge of competition policy, said: “This 255 million euro Bulgarian guarantee scheme will help micro, small and medium-sized companies affected by the coronavirus outbreak to cover their immediate working capital and investment needs.
“We continue working closely with member states to ensure that national support measures can be put in place in a coordinated and effective way, in line with EU rules,” Vestager said.
Bulgaria had notified the Commission under the Temporary Framework of a 500 million leva guarantee scheme on existing or new loans to support companies affected by the coronavirus outbreak (so-called “Intermediated SME Loan Guarantee Program”).
Following a 500 million leva state-funded capital increase of the Bulgarian Development Bank, the latter will provide public guarantees on investment loans and working capital loans to micro, small and medium-sized companies affected by the coronavirus outbreak in Bulgaria, the European Commission statement said.
The scheme aims at limiting the risk associated with issuing loans to those companies that are most severely affected by the economic impact of the current crisis.
It will help businesses cover their immediate working capital or investment needs and ensure that they have sufficient liquidity to continue their activities, the statement said.
The Commission found that the Bulgarian measure is in line with the conditions set out in the Temporary Framework.
In particular, that the underlying loan amount per company is limited to what is needed to cover its liquidity needs for the foreseeable future, the guarantees will only be granted until the end of this year, the guarantees are limited to a maximum five-year duration, the guarantee coverage for each loan is maximum 80 per cent, and the guarantee fee premiums do not exceed the levels foreseen by the Temporary Framework.
The Commission therefore concluded that the measure is necessary, appropriate and proportionate to remedy a serious disturbance in the economy of a Member State, in line with Article 107(3)(b) TFEU and the conditions set out in the Temporary Framework.
On this basis, the Commission approved the measures under EU State aid rules, the statement said.
Source : https://sofiaglobe.com/2020/04/09/covid-19-ec-approves-500m-leva-bulgarian-guarantee-scheme-to-support-smes/