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Financing of Micro,Small and Mid-sized Enterprises

October 23, 2020

Financing of Micro, Small and Medium-Sized Enterprises for Adaptation of Their Activities within the Context of COVID-19

On 15 October 2020, the Managing Authority of Operational Programme Innovation and Competitiveness 2014-2020 announced for public discussion a procedure for selection of projects "Adapting of the activities of SMEs within the context of COVID-19”. This article briefly describes the main parameters of the procedure and how to apply. It is important to note that the procedure is not yet open for application and it is possible for changes to the application conditions to be introduced beforehand.

1. Eligible Applicants

The eligible candidates will be small enterprises within the meaning of the Small and Medium-sized Enterprises Act (SMEA)1 meeting the following criteria:

  • To be traders, registered under the Commerce Act2 or the Cooperatives Act (branches of legal entities registered in Bulgaria cannot participate in the procedure for selection of projects );
  • To have a minimum of one closed financial year (2019)3 before the date of announcement of the procedure, during which economic activity has been carried out;
  • The applicants must have accumulated net revenue from sales for 2019, as follows:
  • Microenterprises – no less than BGN 30,000;
  • Small enterprises – no less than BGN 200,000;
  • Medium-sized enterprises – no less than BGN 1,000,000.

The applicants may apply for financing only for their main economic activity. The code of the main economic activity shall be checked as per the information for 2019.

2. Amount of the Financing

The minimum and maximum amounts of the financing grant shall depend on the type of enterprise applying, within the meaning of SMEA:

  • Microenterprises shall be able to apply for a grant amounting between BGN 3,000 and BGN 15,000;
  • Small enterprises shall be able to apply for a grant amounting between BGN 10,000 and BGN 30,000;
  • Medium-sized enterprises shall be able to apply for a grant amounting between BGN 25,000 and BGN 75,000.

The financial grant provided under the procedure cannot exceed 10% of the net revenue from sales of microenterprises, 5% of the net revenue from sales of small enterprises; and 2.5% of the net revenue from sales of medium-sized enterprises.

It is important to note that the co-financing rate under the procedure is 70%. The remainder of the total eligible costs under the project must be co-financed with own funds of the applicant or with funds from outside sources, except for any type of public financing.

3. Activities and Costs Eligible for Financing

Eligible under the procedure will be activities for re-organization and adaptation of the working places and/ or the models of work in micro-, small and medium-sized enterprises, related to the ensuring of healthy and safe working conditions in the conditions of COVID-19.

The eligible costs include long-term tangible and intangible assets, costs for materials and consumables as well as costs for construction and installation works.

Other eligible costs may include:

  • Costs for equipment for sanitation and disinfection, incl. installation of automatic dispensers;
  • Costs related to reorganization and adaptation of work processes through:
  • Providing physical isolation/ safe distance at the workplace (barriers, repositioning of production machinery and equipment etc.);
  • Separation of traffic flows, incl. new entrance/ exit and providing contactless passage between the individual rooms by installing automatic doors/ providing automatic lighting;
  • Air conditioning and ventilation to minimize the risk of virus circulation
  • Providing conditions for remote work through - hardware / software for remote access; remote operation reporting software.

On the other hand, the application conditions provide for a number of ineligible costs, including (the list is not exhaustive):

  • Costs for activities that were started and physically completed or fully implemented before the submission of the project proposal, regardless of whether all related payments have been made;
  • Construction and installation costs for rented premises for which the applicant does not have a lease agreement for the sustainability period (minimum three years from the final payment under the project);
  • Construction and installation costs for which permits are required from competent authorities;
  • Major repair costs;
  • Costs for machinery, equipment and facilities for production needs;
  • Costs for the purchase of vehicles;
  • Costs financed by public funds;
  • Costs for second-hand fixed assets, second-hand materials and second-hand consumables.

4. Application Procedure and Necessary Documentation

The applicants under the procedure will be required to submit entirely online the following documentation:

  • Declaration for the circumstances under Art. 3 and Art. 4;
  • Declaration for minimal aid – filled in as per template;
  • Declaration that the applicant is familiarized with the Conditions for application and the Conditions for performance;
  • Explicit power of attorney filled in as per template – in case that the submission of the project proposal is made through a proxy.

Upon approval, the candidates will be required to present an additional set of documents.

The evaluation of candidates will be carried out in two stages - assessment of administrative compliance and eligibility (stage 1) and technical and financial evaluation (stage 2).

The public discussion of the procedure took place until 22 October 2020 and it is still unclear when the application conditions will be announced in their final version and the procedure will be open for application. Therefore, it should be noted that amendments to the application conditions prior to its opening are possible.

 

1 The concepts of “micro”, “small” or “medium-sized” enterprise within the meaning of SMEA do not have identical meanings with the definitions of these concepts in the Accountancy Act (AA). It is possible for a medium-sized enterprise (respectively, a micro or small enterprise) within the meaning of AA to not be such within the meaning of SMEA.

2 Branches of legal entities registered in Bulgaria cannot participate in the procedure for selection of projects due to the lack of independent legal personality.

3 As indicated in Section A "Revenues", item I "Revenues from operating activities", row "Net revenue from sales", code 15 100, from the revenue part of the Revenue and Costs Report for 2019, part of the annual activity report, submitted to the National Statistical Institute.

 

This material is not exhaustive, is only of general nature and does not represent a specific advice or consultation. Should any additional questions arise, please do not hesitate to contact us at tel.: 02/943 37 00, fax: 02/943 37 07, е-mail: office@afa.bg or at: 38, Oborishte Str., Sofia 1504.

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