Financing from banks – general information

Updated last 26.03.2021

The first thing that probably comes to mind when you need additional funds to finance your businesss is a bank loan. Banks in our country are the biggest creditors and they offer different types of loans to micro-, small and medium-sized enterprises. The website of the Bulgarian National Bank (BNB) offers a list of all banks and branches of foreign banks licensed in the Republic of Bulgaria, which may provide financing in the form of business loan or bank guarantees.

Important to know

When you apply for a loan most banks require guarantee that you will repay the loan regardless of the financial welfare of your company. In this case you have to provide to the bank a collateral that you will repay your debt (which in the practice is also considered a guarantee), most often in the form of mortgage on real estate or pledge of a tangible or financial assets subject to your operations. Additional information on bank guarantees is available here.

Detailed information regarding the different products that licensed banks and branches of foreign banks offer is available on the website of the respective financial institution or in the nearest branch of the bank. According to art. 58, para 1 of the Credit Institutions Act upon the granting of a loan the bank is obliged to provide you, free of charge and in writing, the terms and conditions of the loans, containing at the very least information regarding:

• The fees, commissions and other charges directly related to the loan agreement and the objective criteria based on which these expenses may change;
• The interest rate, expresses as interest rate per annum, the interest calculation method, as well as the terms and conditions under which the interest rate may change upon the full repayment of the loan;
• Additional obligations related to payments;
• The terms and conditions and costs in case of early repayment of the loan.

In order to make an informed decision regarding the bank which to sign business loan agreement with, it is good to obtain information regarding the various options, which you may take advantage of by comparing:

• The type of the loan;
• The total amount you will receive;
• When and how you will get the money;
• The term of the loan agreement;
• The collateral that should be provided or not;
• The consequences in case of any instalments not paid;

• The terms of the right to withdraw from the agreement, etc.