The Bulgarian small and medium enterprises (SMEs) are now expecting the first calls for project proposals under the new Operational Programme ‘Competitiveness and Innovation’, scheduled to start in May this year. Traditionally, this is one of the most attractive operational programmes because of the direct effect that the investment component has on business.

Most of the application requirements have been preserved from the old programming period, yet there are a number of developments, especially in the scheme expected to launch soon – ‘Improving the production capacity of SMEs’. As much as EUR 150 mln. have been provided, which will be divided into three different reception periods for 2015. The key difference to the previous scheme ‘Technological modernisation’ is the adoption of a sectorial approach to accepting projects. In practice, this means that candidates are divided into 3 groups:

• 1 May - 30 June 2015 ‘low-tech and medium-tech industries’
• 1 July - 31 August 2015 ‘high-tech and medium high-tech industries’
• 1 September - 30 October 2015 - the ‘knowledge intensive services’ sectors.

For the first time companies with identical profile will compete among themselves. Eliminated are situations where, for example, a clothing company is competing with a company producing electric motors, and each of the categories has its own budget.

The scheme is aimed at micro, small and medium enterprises registered under the Commerce Act, as large enterprises are not included in the list of eligible candidates. SMEs will once again be able to apply for acquiring tangible and intangible assets - machines, production lines, technological equipment, specialised software associated with the production activity.

Under the conditions, potential SME beneficiaries are required to:

• be legal persons or sole proprietors registered under the Commerce Act or the Cooperatives Act;
• be headquartered in Bulgaria;
• have completed at least 3 financial years - 2012, 2013 and 2014;
• have generated net sales revenue total for the last 3 financial years (2012, 2013 and 2014) amounting to, depending on the category of the candidate enterprise, as follows:
  - micro enterprises ≥ BGN 200 thousand;
  - small enterprises ≥ BGN 1 million;
  - medium enterprises ≥ BGN 6 million;

The important change here is that there is no minimum threshold of net sales for each of the 3 financial years, placing emphasis on the complementary cumulative effect of all 3 years. The amount of the grant is determined on a regional basis, which is a novelty in comparison to the schemes in the previous programming period, and is as follows:

• for micro and small enterprises, implementing a project within the South West Planning Region (SWPR), including Blagoevgrad, Kyustendil, Pernik, Sofia and the Sofia area - 45 %;
• for medium enterprises, implementing a project on within SWPR – 35 %;
• for micro and small enterprises, implementing a project outside SWPR – 60%;
• for medium enterprises, implementing a project outside SWPR – 60%.

Maximum and minimum grant available:

• for micro enterprises – BGN 100 000 – 500 000
• for small enterprises – BGN 200 000 – 750 000
• for medium enterprises – BGN 300 000 – 1 000 000

The total budget of BGN 293 374 500 is three times bigger than the last intake under the analogous scheme ‘Technological modernisation in SMEs’. This, together with the more elaborate requirements to candidates, will give more companies the chance to win funding.

In addition to these changes, companies will also be affected by the European regulations that necessitated changes to the ceiling for de minimis aid that an SME can receive in a given period of time. Until now, the threshold for a grant under de minimis was the BGN equivalent of EUR 200,000 over 3 consecutive financial years per enterprise. From 2014, this rule was changed, so that the EUR 200,000 for the same 3 year period applies to both the candidate company and its affiliate companies. This effectively means that a company, which is part of a holding company or is in any other way affiliated with another company/ies will consider the aid amount on a cumulative basis.

The well-known scheme for technological modernisation is an excellent opportunity for companies to obtain the equipment they are lacking, or an entirely production line or machine to help them boost their production capacity, increase their product variety, improve the quality of their production, or even to make a drastic change and run completely new production. There are no restrictions on where to purchase such assets from - each company is free to choose the best technology for their specific needs or limit the number of assets that may be purchased under the project. The scheme is not aimed at start-ups.

The author of this article, Mrs. Kalina Stancheva, is a free associate at law firm Ruskov and Colleagues, specialized in project development grants. Mrs. Stancheva has had extensive experience in the development of such projects and has won on numerous occasions.