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More EBRD funds for micro businesses in Romania’s regions
Loan to Express Finance to stimulate growth in crucial sector
More micro and small businesses in a greater number of Romania’s regions will have access to finance following a €2.25 million loan from the EBRD to Express Finance. Through its branch network nationwide, Express Finance will use the loan to on-lend finance to local enterprises across the country wishing to start up or expand their businesses.
Express Finance has more than 11 years of experience in the micro, small and medium enterprises (MSMEs) sector in Romania. Initially operating as an NGO in the business and housing lending market, Express Finance began its transformation into a commercial company in January 2006 and is now one of the largest microfinance providers across Romania. Based in the western town of Timisoara, Express Finance carries out its activities through a network of 17 offices across 26 of Romania’s 42 counties.
The EBRD loan comes at a crucial point for Express Finance, which is transforming into a formal non-bank micro finance institution at the time when the Romanian MSMEs sector is growing rapidly and is lacking reliable access to finance. This facility will help overcome these gaps in the market and will support Express Finance in providing services catered for the underserved businesses and entrepreneurs principally in Romanian rural areas.
MSMEs comprise over 99.9 percent of all enterprises in Romania, and 92.2 of these are micro enterprises. Romania is estimated to have 23 active micro and small enterprises per 1,000 inhabitants, which is almost half the number than in some new EU countries, such as the Czech and Slovak Republics.
Olivier Descamps, EBRD’s Business Group Director, said Express Finance is playing a crucial role in supporting a vibrant and entrepreneurial micro and SME sector in many rural areas of the country. The loan will stimulate the creation of many new micro businesses that will help create jobs and support economic growth in Romania. More EBRD support to businesses in rural parts of Romania demonstrates the Bank’s commitment to the development of this sector and is a continuation of EBRD’s strong and productive cooperation with local investors,” Mr Descamps said.
The loan comes under the €88 million Romania Micro Credit Facility which was launched by the EBRD, EU and the Romanian government in 2006 with the aim to provide lending to non-bank microfinance institutions and commercial banks servicing the MSMEs sector. The facility was created to address the issue that entrepreneurs in Romania, especially in remote and rural areas, have little access to finance other than from sources beyond the financial sector that can charge very high interest rates.
The EBRD finance will be supported by €150,000 in technical assistance to expand Express Finance’s rural finance orientation, including agricultural lending, introducing new MSE products and strengthening regional management capacity.
From its inception until end of 2006, Express Finance has disbursed more than $47 million spread over 11,800 loans with the average amount of loans disbursed being below $4,000.
To date the EBRD has investments of over EUR 215 million in the MSMEs sector in Romania with the principle aim of supporting the development of micro and small business in Romania’s rural regions.
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