Terms of loans for projects implementation

  • FLAG provides loans for project implementation from municipalities, associations and companies with municipal participation;
  • According to loans implementations, short-term loans (repayment term up to one year) and long-term loans (repayment term of more than one year) are provided in BGN or EUR. Repayment deadline on loan, provided by FLAG, is in accordance with payments from OP managing authorities;
  • As a collateral, FLAG accepts the own revenues of the municipality within the meaning of the Law on Municipal Budget: revenues from local taxes and fees, from services and rights, from municipal property, from fines and pecuniary penalties, from interests and defaults, as well as the revenues from the state balancing subsidy for local activities and/or a bank guarantee, issued by banks, which are rated by Standard & Poor’s, Moody’s or Fitch at no less than one point under the rating of the external debt of Republic of Bulgaria, which has been given by the same agencies, and not lower than the investment rating.
  • The maximum amount of the loan for preparation of project proposal is BGN 1 million.

Requirements to the borrower

  • Possibility for municipality/municipal companies to service the loan;
  • Proven administrative capacity of the municipality/municipal company for project implementation;
  • Consistency of a financial indicators and project risk with credit policy of FLAG.

Credit service

The municipality/municipal company utilizes the approved loan once or in tranches, according to loans contract. The absorption scheme of funds from loan for project implementation shall be complied with payment request to OP managing authorities.

The repayment schedule for each contract shall be agreed, according to a specific request, financial capacities of municipalities/municipal companies and the source of repayment. The agreed interest rate are monthly accrued and repaid, unless otherwise has been agreed in loans agreement. The source of funds for eligible costs repayment from the principal are payments from Managing Authority and for the ineligible – own revenue of municipality/municipal company.