SME Finance Facility – Phase I

Project Description

The SME Finance Facility combines loans from the European Bank for Reconstruction and Development (EBRD), the European Investment Bank (EIB) and the KfW (Kreditanstalt für Wiederaufbau, German government’s development bank) with EU grant resources, to support SME lending in the Eastern Partnership region. Financing is channelled through financial intermediaries throughout the region, increasing the availability of long-term funding to the SME sector.

Specific Objective

The SME Finance Facility aims to:
– 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.

Expected Results

EBRD/KfW (€10.4 million – 2010-2019)
– Credit support for SME lending in EaP countries or regions where lending to SMEs has decreased considerably due to heightened risk aversion among Participating Financing Institutions (PFIs), resulting from the crisis. This takes the form of a loss risk-sharing cushion for PFIs, provided for sub-loans funded under EBRD/KfW credit lines.
– Technical assistance to PFIs on a case-by-case basis, in order to maximise their ability to service the needs of SMEs as well as to expand SME financing to new areas and to develop new products for SMEs.
EIB (€5.1 million – 2010-2020)
– Provision of 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 SMEs. The EU grant is also used as a risk-sharing cushion for the loans granted by PFIs to SMEs for up to 10 % of the sub-loan amount.
– Technical assistance to PFIs to support the expansion of SME lending.

Map of Activities and Beneficiaries

* Locations on the map are indicative and may not reflect precise location.




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