SME Finance Facility - Phase I
Project Description
The SME Finance Facility combines European Bank for Reconstruction and Development (EBRD), European Investment Bank (EIB) and KfW (Kreditanstalt für Wiederaufbau, or Reconstruction Credit Institute) loans with EU grant resources, to support SME lending in the Eastern Partnership region.
Specific Objective
- Rebuild financial intermediaries’ confidence to extend financing to SMEs, including micro-enterprises, following the financial crisis.
- Enhance financial intermediaries’ capacity to assess and monitor the related risks and manage their SME financing.
- Strengthen and deepen the SME credit markets.
- Expand financing options available to the real economy.
- Promote continued development of market-based financial institutions, and contribute to institution building.
- Support expansion of private and entrepreneurial initiatives, working with local and international financial intermediaries.
- Enhance financial intermediaries’ capacity to assess and monitor the related risks and manage their SME financing.
- Strengthen and deepen the SME credit markets.
- Expand financing options available to the real economy.
- Promote continued development of market-based financial institutions, and contribute to institution building.
- Support expansion of private and entrepreneurial initiatives, working with local and international financial intermediaries.
Expected Results
EBRD/KfW Window:
- The project provides credit enhancement support for SME lending in EaP countries/regions where lending to SMEs has decreased considerably or even stopped due to a heightened risk aversion of the PFIs resulting from the crisis.
- Under the EBRD/KfW window, the Credit Enhancement support takes the form of loss risk sharing cushion for PFIs, provided for the portfolio of sub-loans funded under the EBRD/KfW credit lines. Partner Financing Institutions can obtain up to a 50% recovery, capped at the limit of 10% of the disbursed amount of their respective credit lines.
- In addition, the project provides technical assistance to participating Partner Financing Institutions, on a case-by-case basis in order to maximise the ability of the PFI to service the needs of the SME sector as well as to expand their SME financing to new areas and to develop new products for the target group, particularly in key, underbanked regions of the eligible countries.
EIB Window:
- Provides loans and credit enhancement support in the form of interest-free loan co-financing of up to 10% of a traditional EIB loan to the PFIs, which passes this interest-free co-financing on to the SMEs. The EC grant is also used as a risk-sharing cushion to the loans granted by PFI to SMEs for up to 10 % of the sub-loan amount.
- Provides technical assistance to the PFI is also foreseen with the aim to support expansion of SMEs lending.
- The project provides credit enhancement support for SME lending in EaP countries/regions where lending to SMEs has decreased considerably or even stopped due to a heightened risk aversion of the PFIs resulting from the crisis.
- Under the EBRD/KfW window, the Credit Enhancement support takes the form of loss risk sharing cushion for PFIs, provided for the portfolio of sub-loans funded under the EBRD/KfW credit lines. Partner Financing Institutions can obtain up to a 50% recovery, capped at the limit of 10% of the disbursed amount of their respective credit lines.
- In addition, the project provides technical assistance to participating Partner Financing Institutions, on a case-by-case basis in order to maximise the ability of the PFI to service the needs of the SME sector as well as to expand their SME financing to new areas and to develop new products for the target group, particularly in key, underbanked regions of the eligible countries.
EIB Window:
- Provides loans and credit enhancement support in the form of interest-free loan co-financing of up to 10% of a traditional EIB loan to the PFIs, which passes this interest-free co-financing on to the SMEs. The EC grant is also used as a risk-sharing cushion to the loans granted by PFI to SMEs for up to 10 % of the sub-loan amount.
- Provides technical assistance to the PFI is also foreseen with the aim to support expansion of SMEs lending.
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PROJECT DETAILS
Regional
Priority Area:
Partnership that creates, Partnership that creates Subsector:
Economy & trade, Employment and entrepreneurship Topic:
Business EaP Countries:
Armenia, Azerbaijan, Belarus, Georgia, Republic of Moldova, Ukraine Project Status:
Completed Start Date:
22.12.2010 End Date:
22.12.2020 Website:
http://www.eu4business.eu/programme/sme-finance-facility-phase-i?destination=programmes%3Fpage%3D5
EU Project Number:
255-386