Romania Micro Credit Facility |
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EBRD, EU and the Romanian government at work: Microfinance The challenge Entrepreneurs in Romania, especially in remote and rural areas, have little access to finance other than from family members or sources beyond the financial sector that can charge very high interest rates. There are still not enough banks in Romania which are willing to lend to micro and small enterprises (MSEs) due to seemingly increased risks associated with the sector, while non-banks are largely limited by availability of funding. The microfinance market in Romania The microfinance market in Romania is estimated to be worth over €0.5 billion. Commercial banks meet 55 per cent of the microfinance market demand, only 15 per cent of the market is met by non-bank micro finance institutions (NBMFIs) and at least 30 per cent of the market remains uncovered overall. The proportion of uncovered market in rural areas as well as lending to start-up MSEs is likely to be much higher. In general, for the proportion of the micro, small and medium-sized enterprises (MSMEs) per inhabitant, Romania is estimated to have about 13.6 active MSMEs per 1,000 inhabitants, which is less than half of that of neighbouring Bulgaria (27.6 MSMEs per 1,000 inhabitants) and even less than when compared to Czech Republic, Hungary Slovakia and Slovenia (42.7 MSMEs per 1,000 inhabitants). The project and its donors The Romania Micro Credit Facility (RMCF) provides loans – in Euro or local currency, lei – to local banks and non-bank micro finance institutions to lend to the smallest enterprises, sole entrepreneurs and farmers. The new facility is financed with:
Part of the EU Phare and the Romanian government financing is €2.5 million of technical assistance funds to support institution building of the partner lending with the aim to increase lending to MSEs including among other development of new financing products for MSEs, training of staff in providing financing to MSEs and MSE products marketing. To encourage partner lending institutions to finance more start-up MSEs (those less than 12 months old) €3 million of the EU and Romanian government finance has been earmarked for the risk-sharing facility to support lending to start-up micro businesses. How to become a partner lending institution Existing partner lending institutions Opportunity Micro-Credit Romania (OMRO), a micro finance institution in central Romania, was the first to receive funding under the Romania Micro Credit Facility. A RON 9.85 million (€2.8 million) loan was signed in December 2006 to assist OMRO to build on its existing portfolio of micro-business clients. Banca Transilvania. A €15 million loan was signed in August 2007 to increase Banca Transilvania’s lending to the smallest of micro enterprises and start-ups. Express Finance. The newest partner to participate in the programme offers business loans to micro and small entrepreneurs as well as housing and energy efficiency loans. The €2.25 million loan signed in September 2007 will enable Expres Finance to to on-lend finance to local enterprises across the country wishing to start up or expand their businesses. How to become a partner lending institution EBRD is seeking to engage as many partner lending institutions as possible. To become a partner of the RMCF, an applicant bank or a non-bank microfinance institution must be financially stable and have a strategy focused on serving micro and small enterprises. When selecting potential partner lending institutions, the EBRD project team carries out a detailed analysis of the financial status and the loan portfolio. The applicant should submit its audited financial statements of the last three years prepared by EBRD accepted audit companies and preferably in accordance with the International Financial Reporting Standards. What we offer partner lending institutions Loan funding is provided to partner lending institutions on commercial terms in the form of senior loans. The RMCF considers institution building of its partner lending institutions to be one of its crucial tasks. The partner lending institutions will be offered a technical assistance package to assist in introducing or increasing lending to small micro enterprises, start-ups MSEs and/or MSE lending expansion in the identified priority areas in accordance with their respective business plan. The package will be completely tailor-made in order to reflect the partner institution’s specific needs in this area and can range from new MSE product development, development of new or enhancement of MSE lending technologies to training of MSE loan officers, institutional strengthening. Contact us If you are interested in joining the Romania Micro Credit Facility, please contact us: Jana Sivcova Mihai Dragota or contact the EBRD Bucharest Office Basic criteria Potential borrowers should apply for funding from the partner lending institutions. Under the RMCF, financing is extended to enterprises operating in the field of production, services and trade. Loan funds may be used for working capital financing and the purchase or refurbishment of fixed assets. Start-up MSEs (those in operation less than 12 months) are particularly encouraged to apply. The criteria for selection of the borrowers depend on the specific operational policies of partner lending institutions, but a broad eligibility criteria will apply. RMCF financing cannot be used for any of the following activities:
In addition, all eligible projects must comply with the national environmental laws and municipal environmental regulations. Loan amounts Within the framework of the RMCF, many different types of business finance in the range starting from EUR 100 up to EUR 25,000 or 50,000 depending on a type of partner lending institutions are offered. Partner lending institutions OMRO Banca Transilvania S. C. Express Finance
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