Financial Products, basic financing parameters
During the first investment cycle, the eligible projects are financed as the JESSICA funds provided by the “Regional Fund for Urban Development” AD are 1/3 of the loan amount, and the remaining 2/3 are bank financing, primarily provided by Societe Generale Expressbank AD (with universal successor DSK Bank AD).
During the current reinvestment cycle, the Fund provides 50% of the loan resource, and the remaining 50% is provided by DSK Bank AD.
Lending from both sources is project-oriented and up to 70% – 80% of total costs of the project, incl. capital costs, development costs, costs for legal, design, financial and insurance services, construction costs (including construction reserve), equipment costs, as well as initial working capital.
Loan funds are granted on the basis of cost proving documents, and in some cases, at the discretion of the lenders, upon presentation of progress reports from an independent technical/construction advisor.
The repayment installments on the principal start after the date of commercial operation of the project, i.e. after the expiry of the grace period. The terms and repayment schedules of the loans will be personalized to the economic cycle of the respective project. The total life cycle of the loan can be up to 2045.
The price of the general financing under JESSICA is determined in the following combination:
– financing from the Fund (up to 50%) is in BGN, at an interest rate significantly lower than the market rate, fixed for the entire term of the loan; no management, commitment and prepayment fees;
– co-financing from “DSK Bank” (50%) is in EUR or BGN, at market interest rates and fees;
Common assets, traditionally provided as collateral for bank loans, are required to secure the loans:
– when the project is separated into a separate company – assets of the project company and any guarantee from the investor company;
– in other cases – assets of the project itself and/or other assets of the investor acceptable to creditors.
A mandatory condition for consideration of a given urban project for financing from the Fund is written support from the relevant municipality, confirming that the project is in accordance with urban development strategies. Additional information regarding the stages of examination and evaluation of City projects, priority areas of activity and projects eligible for financing under JESSICA, as well as types of expenses, financial products, etc. is contained in the Fund’s Call for Project Proposals, which you can find here, as well as in the Fund’s Investment Policy, which you can find here, published at the beginning of the investment process in 2012.