The Fund of Funds Signed a Guarantee Agreement with BDB Micro Finance
The funds will be lent to social entrepreneurs and start-ups
The Fund of Funds (FoF) signed a guarantee agreement with BDB Micro Finance, a subsidiary of the Bulgarian Development Bank, for the First Loss Portfolio Guarantees for Micro Lending financial instrument. The product is designed to offer support to start-ups and social enterprises (the so-called mission-driven businesses).
The intermediary was selected through a public procurement process. BDB Micro finance will grant investment or working capital loans of up to EUR 50 000 (BGN 97 791) on preferential terms, with the possibility for a grace period and at interest rates that are 25 % below the standard lending terms provided by the financial institution. The resources made available by the FoF are intended for guarantees under the Programme amount to BGN 1 million, and the volume of loans to final recipients is expected to reach BGN 5 million
By implementing its First Loss Portfolio Guarantee for Micro Lending financial instrument, the FoF will facilitate access to finance for start-ups and social enterprises that find it more difficult to access bank loans because of their higher risk profile. Entrepreneurs from vulnerable groups such as people with disabilities, those unemployed for more than six months, and young people up to the age of 29 can also use such loans to realise their business ideas.
The First Loss Portfolio Guarantee for Micro Lending financial instrument comes as yet another FoF product funded under the Operational Programme for Human Resources Development 2014—2020 co-financed from the European Social Fund. It will be implemented alongside the other currently active micro lending instruments which have already been placed on the market by First Investment Bank, Microfund AD, SisCredit AD and UniCredit Bulbank.