New Opportunity for Financing of Small Enterprises with Turnover Over BGN 500,000

On 9 October 2020, the Managing Authority of Operational Programme Innovation and Competitiveness 2014-2020 announced for public discussion a procedure for selection of projects "Support for small enterprises with turnover over BGN 500,000 for overcoming of the economic consequences of the COVID-19 pandemic”. 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) meeting the following criteria:

• To be traders, registered under the Commerce Act or the Cooperatives Act;
• To have a minimum of two closed financial years (2018 and 2019) before the date of announcement of the procedure, during which economic activity has been carried out;
• To have accumulated turnover for 2019 equal or exceeding BGN 500,000 (as per the declared in the Annual tax return under Art. 92 of the Corporate Income Taxation Act or in case of sole traders – in the Annual tax return under Art. 50 of the Personal Income Taxation Act);
• To have registered for a total of three months, selected by the candidate, in the period from 1 February 2020 until the month preceding the month of application, average decrease of at least 20% compared to the average turnover for the same three months for 2019 (for the applicants with VAT registration, this data shall be collected ex officio from the submitted VAT returns for the selected three months.);

2. Amount of the Financing and Eligible Costs

The grant will be at an amount of BGN 50,000, provided as working capital and should be used to cover the current operating costs of the applicants – such as raw materials, supplies and consumables, external services (incl. overheads), staff costs (incl. remunerations and costs for social security and health contributions at the expense of the employer).

The conditions for application also provide for a number of ineligible costs, such as costs for activities that were started and physically completed or fully implemented before 1 February 2020, costs for acquisition of tangible and intangible fixed assets, costs for goods for sale, costs for recoverable VAT, costs for taxes and fees, costs for repayment of loans, interest on loans, bank fees, costs for leasing instalments. Personnel costs will also be ineligible if during the period of performance of the project (from 01.02.2020 to the final date of project performance) funds have been received under the 60/40 measure (Decree No. 55/ 30.03.2020 or Decree No. 151 / 03.07.2020), as well as under other public funding programs (such as the employment scheme under Art. 51, Para. 1 of the Employment Promotion Act, the operations of Human Resources Development Operational Program for payment of compensations for maintaining employment, as well as for supporting the employment of unemployed and inactive persons, etc.).

3. 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 financial data – filled in as per template;
• Declaration that the applicant is familiarized with the Conditions for application and the Conditions for performance;
• Declaration for consent for the data of the applicant to be provided to NRA;
• In case that the applicant exempted from VAT registration - turnover sheets for the three selected months with a decrease in turnover;
• In certain cases - explanatory information to the VAT return.

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 16 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.

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.