Фонд за органите на местното самоуправление в България - ФЛАГ ЕАД

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Loan conditions


Advantages of FLAG financing

 

  • Strong state engagement

The financial resources, with which FLAG operates, include assigned budget funds and borrowed capital from financial institutions.
 

  • Eased access to the financing from FLAG

Pursuant to Art. 19a of the Law on Municipal Debt, the municipalities are able to request financing from FLAG for the preparation of project proposals and the implementation of projects without the need of carrying out a procurement procedure for selection of a financing institution.
 

  • Simplified securing of the loan

As collateral on the loans, FLAG accepts the own revenues from local taxes and fees, from services and rights, from municipal property, form the state balancing subsidy – regarding the municipalities, and municipal guarantee – regarding the municipal companies.
 

  • Provision of targeted assistance for the strengthening of the administrative capacity for the development and the management of the project.

FLAG provides free consultations to the municipalities, regarding the sources, conditions and manners for financing of the preparation of projects under the OP/RDP.
 

  • Well-developed branch network of the Managing Bank

FLAG extends and services loans through the Central management of the Managing Bank and its branches throughout the country.

 

Conditions on the loans for preparation of project proposals

 

  • FLAG extends loans for preparation of project proposals only to municipalities
     
  • FLAG extends short term (with a term for repayment of one year or less) and long term (with a repayment term of more than one year) loans for the preparation of project proposals
     
  • FLAG provides financing only for the eligible costs within the meaning of the project proposals under the respective OP/RDP that are being developed
     
  • 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
     
 

Conditions on the loans for implementation of projects

 

  • FLAG extends loans for implementation of projects only to municipalities and municipal companies;
     
  • FLAG extends short term (with a term for repayment of one year or less) and long term (with a repayment term of more than one year) loans for implementation of projects in leva and euro. The deadline for repayment of the loan, which has been lent by FLAG, is in compliance with the payments from the Managing authorities of the Operational programmes.
     
  • 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, and for the municipal companies – a bank guarantee.
     
  • All loans that aim to finance the VaT of grant aid contracts under the Rural Development Programme shall be additionally secured with a pledge on the bank account of the municipality-borrower, to which account the funds for the reimbursement of VaT expenses are transferred, pursuant to Decree №81 of the Council of Ministers, dated 23.04.2010, regarding the spending of funds by the State fund “Agriculture” for the financing of expenditures for Value added tax under projects under the RDP for the period 2007-2013, which have been approved for assistance.
     
  • The maximum amount of a loan/s for implementation of project/s, extended to a single municipality, is BGN 10 million.
     

 

Special conditions for financing of municipal projects for technical assitance:

  • Amount of the loan – up to 25% of the project value;
     
  • The amount of each loan must not exceed BGN 450 000 per project;;
     
  • The last payment of the repayment schedule of the loan must not exceed 50% of the value of the final payment from the MA;
     
  • The total amount of approved loans must not exceed 10% of the credit resources of FLAG.
     
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