Up to BGN 4 500 interest-free loan for individuals due to COVID-19

Mechanism, terms and conditions for individuals unable to work due to COVID-19 pandemic to receive a loan of up to BGN 4 500

On 14th of April 2020, the Council of Ministers officially entrusted the Bulgarian Development Bank with the implementation of the programme for guaranteeing interest-free loans intended for two groups of individuals. On the one hand, these are persons on employment contract who have gone on unpaid leave, and on the other - the self-employed.

The programme is part of the package of crisis measures proposed by the government and the idea is to give citizens the opportunity to take out a loan for which they will not owe interest, as it will be managed by the state. The loans themselves would be granted by commercial banks, with the state acting as guarantor through the Bulgarian Development Bank. Twelve of the country's largest banks will participate in the Bulgarian Development Bank (BDB) programme, under which they will be able to provide interest-free loans to individuals, namely:

• Allianz Bank Bulgaria;
• DSK Bank;
• Investbank;
• International Asset Bank;
• UBB;
• Municipal Bank;
• FIB;
• Raiffeisen Bank;
• D Commerce Bank;
• UniCredit Bulbank;
• CCB;
• Eurobank Bulgaria;

There are also conditions that the persons concerned must meet if they want to benefit from the possibility of obtaining such a credit, grouped into two categories.

Concerning employed persons:

• Must have ceased to perform remunerated work for their employer and be on unpaid leave as a consequence of the pandemic;
• Be a party to an employment relationship in the 6 months prior to going on unpaid leave;
• Not be remunerated under any other employment relationship;
• Have worked at least five working days in the month of March if that is the month in which they are placed on unpaid leave.

Regarding self-employed persons:

• Have discontinued their self-employment and/or suffered at least a 20% decline in their income for the first quarter of 2020 compared to their income in the first quarter of 2019 as a result of the pandemic;
• Do not receive remuneration under other legal relationships.

A general requirement for potential applicants in both categories is that they have no outstanding social-insurance contributions and that they return to the same job after the end of unpaid leave for those on an employment contract or resume their occupation for the self-employed.

The amount that a person will be entitled to withdraw is a maximum of BGN 4 500. It may be withdrawn at once or in three tranches of BGN 1 500 each. The regular interest rate will be 0%there will be no fees, commissions or penalties, nor will applicants need to provide conjunctions.

The maximum extinguishment period will be 5 yearsand the grace period will be a minimum of 6 months and a maximum of 24 months. The credit will extinguish after the grace period and the amount and number of repayments will be determined individually between the commercial bank and the borrower. Commercial banks will have the right to change the extinguishment plan that was originally agreed with the customer, but will still have to comply with the time limits set out in the program. All citizens will have the right to repay their debts early without incurring fees or commissions.

The deadline for applying for the program will be 31.12.2020 and the required documentsto be submitted are:

• Request for financing according to the approved template (will be provided by the commercial bank);
• Valid ID - ID card or passport;
• Registration document of the person, if self-employed;
• Details of the employer and the employment contract (a reference from the National Social Insurance Institution (NSI) is also required);
• A declaration containing the following statements:

• Declaration of interrupted activity of the self-employed and/or documents establishing more than 20% decrease in the income of the self-employed in the first quarter of 2020 compared to the first quarter of 2019;
• Declaration that the person is on unpaid leave as a result of the pandemic, the start date of the unpaid leave must be after 08.03.2020;
• Declaration by the applicant that his/her employer's activities have been temporarily suspended (in whole or in part) as a consequence of the pandemic;
• A declaration that the person is not remunerated for his/her work under another legal relationship;
• Declaration of the person's intention to return to the same job/resume the interrupted activity - for self-employed persons;
• Declaration that the person (whether employed or self-employed) has paid social security contributions;
• Declaration that, at the same time as applying for the credit, the applicant is not benefiting from another measure provided by the State for individuals in connection with the pandemic.

If you have any doubts about the programme, do not hesitate to ask your question by email or by calling one of the telephone numbers listed in the "Contact" section.