PROMOTION BANK TO REDUCE GUARANTEES TO 85%
Promotion Bank will reduce to 85% the guarantees on credits for small and medium-sized enterprises (SMEs) and this became possible after the European Investment Fund (EIF) allocated it a guarantee line of EUR7MN. Currently, the guarantees demanded by other credit institutions are between 120% and 150 per cent. The agreement was signed on Wednesday (July 2) by EIF's CEO Fransis Carpenter and the Chairman of the Management Board and Executive Director of Promotion Bank Dimitar Dimitrov, in the presence of Deputy Premier and Minister of Economy Nikolay Vassilev. This is EIF's first project not only in Bulgaria but in the region as well. Our country is the first of the 13 candidates for EU membership, which has been granted a guarantee line. It is allocated by the European Commission and the EIF to Promotion Bank, which is the first approved financial intermediary. The money is to be utilized between July 1, 2003 and December 31, 2005. In case of success, the bank can apply for increasing the amount of the guarantee line. It is expected to mobilize a financial resource worth at least EUR19MN. All SMEs in Bulgaria with personnel of up to 100 people are entitled to loans if they present a good business plan. The terms for allocating the credits are the same as those, set by Promotion Bank to all the applicants. The loans will be guaranteed up to 50 per cent; they will be market-orientated as well, so that each of the participants would undertake its respective part of the risk. The receivers of credits should prove their business experience; they are also required to have had a positive financial performance for the last year and no liabilities to the State. Credits between EUR20,000 and EUR1MN shall be released. The minimum term of the loans will be three years and the maximum - ten years. The grace period will be from three to ten years.