Micro and small business projects [EBRD - Sectors: Financial institutions]

Project Summary Documents

Project Summary Documents (PSDs) are disclosed for each project prior to Board consideration. They contain project descriptions, financial details, client information, environmental issues, tender guidelines, and contact details. PSDs for private sector projects are disclosed at least 30 days prior to Board consideration and for state sector projects, at least 60 days.

Project Summary Documents

Signed projects

Board approval is the final stage in the project approval process. After Board approval, the EBRD and the client sign the deal and it becomes legally binding. Signed project lists reflect year-end data.

Signed projects (0.1Mb)

Case studies

A new lease of life in Croatia - 2008

Starting or expanding a business can seem a daunting, if not impossible, task – not least during a financial crisis. However, leasing offers a lifeline for companies that do not have the cash to fund all their equipment needs from the outset.

The EBRD is seeking to strengthen and expand leasing to small and medium-sized enterprises (SMEs) in Croatia. In 2008 the Bank provided a €15 million loan to Raiffeisen Leasing under the EU/EBRD SME Finance Facility, which was set up exclusively for the financing of leases. In addition, Raiffeisen Leasing will receive more than €875,000 in technical assistance from the European Commission.

Raiffeisen Leasing is the third-largest leasing company in Croatia with a market share of 8 per cent. Its success has been based on the quality of the assets that it owns, as good equipment means lower service and maintenance costs. Its huge product range – over 100 – and variety of assets also provide security. While many of Raiffeisen’s clients are family-owned agricultural businesses needing crop harvesting equipment, newly emerging industries, especially those using the latest technology such as digital printing, are also looking for leasing finance.

The company is already putting the EU funds allocated for technical assistance to good use. It is deploying the first tranche of €100,000 to train its management and sales employees with the help of Croatian and British consultants.

The European Union is the largest contributor to the EBRD with €521.4 million having been committed to the EBRD-EU technical cooperation fund since 1991. EU funding covers areas ranging from support for small business to the improvement of safety at nuclear power stations.

In Russia, EU funding has helped the EBRD increase lending to the municipal sector, improve lending to SMEs, promote private sector development and enterprise restructuring and improve infrastructure.

Helping small businesses survive in Romania - Annual report 2008

Small businesses in Romania are feeling the pinch, caught between cash-strapped buyers and more cautious banks. In 2008 borrowing by Romania’s small and medium-sized enterprises (SMEs) fell following withdrawal of long-term debt financing from the main commercial banks. The global financial crisis forced many small businesses to shelve expansion plans and even cut jobs. But one Romanian bank continued to do what it does best: lending to small businesses.

Established in 1993 by 40 local entrepreneurs, Banca Transilvania is now the largest private locally owned bank in Romania. It was the first bank in the country to be listed on the Bucharest Stock Exchange and has more than 1.3 million clients. Significantly it is known as the small businesses bank as it counts 125,000 small business clients – from farmers to food distributors – among its clientele.

The EBRD owns 15 per cent of Banca Transilvania and is its largest shareholder. Since 2002 the EBRD has supported the bank’s activities by lending just over €90 million in equity and debt to finance SME credit lines, mortgages, syndicated loans, an energy efficiency facility and recently a rural financing facility.

At the end of 2008 the EBRD provided Banca Transilvania’s liquidity with a €100 million loan to continue supporting the small business sector.Over 7,500 of Banca Transilvania’s SME clients stand to benefit.

This new EBRD finance in support of a solid partner in Romania will allow Banca Transilvania to continue lending to SMEs at a time when credit for that sector has tightened.

Expanding the family business in Montenegro

Renowned as the centre of traditional Montenegrin cuisine, Cetinje is famous for its smoked ham (known locally as “prsuto”) and its cheeses. Visitors come from far and wide to try the local produce and to appreciate the attractions of this historical city, which lies at the foot of Mount Lovc´en, the Black Mountain, from which Montenegro gets its name. As the old capital of Montenegro, the city grew rapidly but its expansion was halted by the Balkan wars and the First World War. Today, it has a population of 15,000 and relies on tourism to generate much of its income.

Cetinje is on the verge of a revival but many of the city’s entrepreneurs struggle to get the financing that they need to build their businesses. One such entrepreneur is Nikola Martinovic´. Following in his father’s footsteps, Nikola had taken over the running of the family business but needed finance to expand his company’s production of prsuto and quality cheeses. So he turned to Alter Modus for assistance.

Alter Modus is a specialist microfinance institution that was originally set up to help refugees and internally displaced people. Back in the 1990s, these represented up to 20 per cent of Montenegro’s population. Nowadays they account for just over 4 per cent. From its humble beginnings, Alter Modus has quickly grown into a saviour for businesses in desperate need of financing. Operating as a non-governmental organisation, Alter Modus provides small loans (averaging €1,600) to people from all walks of life. In 2004 it became the first NGO to receive a loan from the EBRD. A sum of €1 million was provided under the US/EBRD SME Finance Facility.

The aim of Alter Modus is to help people with potential who have good business proposals. When assistance was sought by Nikola Martinovic´, it provided him with a loan of €1,500. Nikola used this to renovate his premises for drying ham and to purchase more meat. Another loan, of €3,000, was used to buy a 500-litre container for processing milk. This allowed Nikola to enter into an arrangement with a local dairy, from which he buys his milk on a daily basis.

A third loan, of €2,000, was used to further improve his facilities in response to the growing demand for his produce. Nikola says that the loans acted as a lifeline for him, allowing him to more than quadruple his cheese production within a very short period of time – he currently produces over 50 kilos of cheese a day. The loans enabled him to expand his business much faster than if he had relied on using profits from his normal business operations. His story is typical of many who have benefited from financing from Alter Modus, whose credit portfolio now stands at over €5 million.