Most small and medium sized enterprises (SMEs) in Bulgaria have not applied for loans, and especially in the light of European Union accession, banks are determined to change this.

Speaking at the Finexpo exhibition in Sofia on December 6, DSK Bank’s Alexander Dzhoganov said that the banking sector should provide more suitable credit products should such companies.

“We are considering financing up to 100 per cent of a project of a company that has won a grant,” Bulgarian-language newspaper Sega reported Dzhoganov as saying.

He said that 89 per cent of SMEs had not applied for financial support. One of the major reasons that companies were not applying was that they lacked capacity to take part in projects financed as part of EU programmes.

Companies that win projects may get EU financing of from 50 to 90 per cent, and must provide the remainder themselves. The EU funding is provided once the project is completed.

He said insufficient awareness of the workings of EU funding, as well as the bureaucracy involved, were other obstacles to companies bidding for projects.

Dzhoganov said that about 29 per cent of companies said that they had not applied for funding because of a lack of information. About 41 per cent said that they did not know that EU funds existed. About half of the companies that wanted funding planned to use if for technological upgrades, while 36.9 per cent intended using it to align their operations with EU requirements. He said that about 20.4 per cent of companies intended using EU funds for innovations.

Bulgarian National Bank governor Dimitar Kostov told Finexpo that the financial sector was the best prepared for Bulgaria’s EU accession, according to a report by Bulgarian news agency BTA. Kostov said that the correlation between financial sector assets and GDP had reached 85 per cent, a three- to fourfold increase in recent years. This was due to the great variety of financial products and services offered on the market, Kostov said.