The Fund of Funds Backs Loans to Social Enterprises and Start-Ups

UniCredit Bulbank to Offer up to 10 Yr Loans of up to EUR 50 000


Microfinancing will be available to social enterprises and start-ups under enhanced terms through loan guarantees provided by the Fund of Funds (FoF). UniCredit Bulbank, which was selected in a public procurement procedure to serve as the intermediary, will lend up to EUR 50 000 or its BGN contervalue with a maximum tenor of 120 months. The loan can be used as investment financing or working capital.

The credit institution signed an agreement with the FoF concerning BGN 5million in bank guarantees. On the basis of that guarantee cover, the bank is expected to make microloans of BGN 25 million in total using its own funds. The FoF’s guarantee covers 80% of the banks’s credit risk attached to each microloan with a cap on losses set at 25% of the portfolio backed by the guarantee.

Using the financial instrument called First Loss Portfolio Guaranteefor Microlending, the FoF will enhance access to financing of start-ups and social enterprises which find it hard to get a bank loan. The reason is their high-risk profile: poor track record if any, shortage of cash inflows, difficulties in putting up security or other negative factors. This type of financing is an opportunity to implement business ideas for entrepreneurs from vulnerable groups such as people with disabilities, people who have been unemployed for more than six months and young people aged under 29.

The loans will be available under relaxed terms and conditions such as lower interest rates, lower security requirements and a an optional grace period.

The First Loss Portfolio Guarantee financial instrument is yet another product launched by the FoF using funds from the Operational Programme Innovation and Competitiveness (OPIC) 2014-2020. The OPIC is co-financed by the European Social Fund and the Youth Employment Initiative. The instrument will be implemented alongside the current microlending instruments with shared risk administered by First Investment Bank, MicroFund AD and SysCredit AD.