FMFIB JSC is implementing an operation for financial instruments through a holding fund under the Programme „Education “(PE) 2021-2027, co-financed by the EU.
The total amount of support from PE 2021-2027 for financial instruments amounts to BGN 32 649 668.00 of which BGN 26 023 513.16 is provided by the European Union through the European Social Fund Plus (ESF+), and 6 626 154.84 represents national co-financing.
The financial resources will be used to structure financial instruments (FIs) under Priority 3 „Linking Education to the Labor Market” of the Programme, through which financial products for equity and quasi-equity investments, as well as debt financial products for loans and guarantees, will be provided.
The indicative allocation of resources between financial products is as follows:
- BGN 12.52 million for equity and quasi-equity investments;
- BGN 3.5 million for loans;
- BGN 0.673 million for guarantees;
The financial instruments are aimed to contribute to addressing some of the challenges, primarily in facilitating the access to finance for start-ups of students and PhD candidates, with the goal to develop their entrepreneurial skills, create self-employment, and assist the transition process from higher education to employment.
The target final recipient are start-up enterprises (registered no more than 5 years before the date of application), owned by students and/or PhD candidates in all forms of education. They are required to hold at least 50% of the enterprise’s capital and be directly engaged in its management. The enterprises must be registered and conduct their main economic activity on the territory of the Republic of Bulgaria.
framework of the Holding Fund, the following financial instruments under PE 2021-2027 are planned:
FI for equity investments - Start-up Accelerator/Alternative Investment Fund: The goal is to invest in a portfolio of start-ups from the target groups (enterprises owned by students and/or PhD candidates (with possible participation of university professors) for business initiation or other entrepreneurial initiatives.
Expected participation of private investors in the capital: at least 1% by the fund manager.
Expected investments in final recipients: BGN 20.27 million.
Eligible investments per final recipient - up to EUR 150 000.
Risk-sharing loans: A debt FI aimed at financing a portfolio of loans each of up to BGN 100,000 (or the equivalent in euros) under favourable conditions to start-ups established by students, PhD candidates (with possible participation of professors).
Financing in the form of long-term loans with a repayment plan or short-term loans with a bullet principal repayment, or in the form of financial leasing, can be provided for:
- Investments in tangible and intangible assets;
- Working capital necessary for the enterprise’s/self-employed person’s main economic activity or for expanding its activities;
- Financing the development and enhancement of the entrepreneur’s/employees’ skills, as well as covering costs for specific and professional training;
The loans will be provided for a term of up to 120 months, with a grace period for principal repayment of up to 3 years and favourable conditions regarding collateral. At least 90% of each loan will be financed with resources from the Programme and will be provided at 0% interest and without additional fees or commissions related to the public part of the funding. No contribution is expected from final recipients.
Expected total amount of loans to final recipients, including the expected contribution from the financial intermediary: BGN 6.79 million.
Expected leverage effect: 1,24.
Capped loss portfolio guarantees: A debt instrument that includes coverage of the financial institutions ‘credit risk for each individual loan aimed at creating a portfolio of new loans with a fixed cap of up to 25% on a portfolio level.
Guarantee percentage for each eligible defaulted loan: 80%.
Expected available amount for final recipients: BGN 6,15 million.
Expected leverage effect: 5,86.
The maximum amount of each loan is BGN 100 000 or the equivalent in euros, the following financing activities are eligible:
- Investments in tangible and intangible assets;
- Working capital necessary for the enterprise’s/self-employed person’s main economic activity or for expanding its activities;
- Financing the development and enhancement of the entrepreneur’s/employees’ skills, as well as covering costs for specific and professional training;
The financial instruments under Programme „Education“ 2021-2027 are expected to support over 220 start-ups owned by students and/or PhD candidates (with possible participation from university professors), will be supported.