Strategies of the Development of Entrepreneurship and SME

Bulgarian SMEs obtain additional capital from several sources: bank credit lines,government program, NGOs, leases, international organizations, guarantee scheme.What is indicative of SMEs probability of success when applying for a loan is that hardly13% of submitted projects are approved. On the one hand, this shows inadequate financialtraining and unwillingness (inability) of SMEs to pay to financial consultants. On the otherhand, those SMEs that have overcome the “credit barrier” and courageously apply for borrowedcapital are usually too much indebted and banks do not lend to them. According to ESTATAgency surveys the major reasons for the high number of rejections are: inadequate collateral,poor financial condition, lack of clarity in the project. Figure 9 presents a quantitative allocationof rejections to bank loan applications by SMEs.Bank lending remains a costly and hardly accessible source for most of Bulgarian SMEs.For this reasons, some of them have borrowed consumer loans for the needs of the business,i.e. smaller loans at considerably higher interest rates at the expense of lower collateralrequirements. About 37 per cent of SMEs have used commercial loans over the last three years(the ceilings of such loans are about BGN 70 thousand). The share of borrowed investmentloans is about 18 per cent of SMEs and maximum amounts of investment loans are as anaverage about BGN 78 thousand. High interest rates, unaffordable for SMEs, are the major36