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Our approach to small businesses

At the European Bank for Reconstruction and Development (EBRD) we believe that creating the conditions for small businesses to thrive is fundamental for sustainable, inclusive economic growth.

A vibrant small and medium-sized enterprise sector is a vital ingredient for a healthy market economy. Small and medium-sized enterprises (SMEs) make up over 99% of the total number of businesses across the countries where we work. They are responsible for large contributions to value added and employment.

SMEs also play an important role in the political economy, helping to promote and strengthen reforms. Economically, they have an inherent interest in promoting policies that favour a level playing field, while politically, a thriving SME sector empowers and grows a strong middle class, which can then serve as a constituency seeking democratic reform and sound economic governance.

While smaller businesses tend to be more flexible and quick to change than larger corporates, they are much more vulnerable to deterioration in the business environment. They are also more sensitive to harassment from government institutions and have fewer resources to draw on when times are hard.

One great challenge for small businesses is accessing the finance they need to develop and grow. Issues of collateral and alignment with international accounting standards affect SMEs disproportionately, while financial institutions have less experience lending to the small business segment and often perceive them as riskier than the evidence shows them to be.

Our Small Business Initiative

Our Small Business Initiative is a strategic initiative integrating the tools the EBRD offers to support small enterprises. We provide loans and investments through financial institutions and risk-sharing facilities, and we finance small businesses directly. But we don’t stop there.

Our support for SMEs stretches over several priority areas. We provide small enterprises with advice to help them innovate and grow and we work with policy-makers to create an environment where they can succeed.

To classify a company as an SME, we look at a combination of turnover, employees and total assets. Typically, an SME is considered as a company with turnover of under €50 million (or a balance sheet of under €43 million), with between 10 and 250 employees (exceptionally up to 500 employees)

From financiers to engineers, lawyers and industry experts, our unique mix of skills and expertise comes together to offer solutions that really meet the needs of small businesses.

What we offer

Almost half of the EBRD’s annual investment and banking projects each year are directed at such enterprises. This results in a meaningful impact on individual companies and local business environments as a whole. We have helped more than 30,000 small businesses access advisory services – over 2,000 a year– while our financing through partner banks has reached hundreds of thousands more. This means that over €1 billion is channelled to over 300,000 micro and small businesses each year.

We also understand that most small businesses sell their goods and services locally. So we work with our partners to lend in local currencies, reducing the exposure of firms and the wider financial sector to foreign exchange risk. Our local currency programme is currently active in 15 countries.

Thanks to our strong presence on the ground, in up to 40 economies from Morocco to Mongolia, we have built a wealth of knowledge and experience with small enterprises.

We bring this experience to bear through a country-focused approach, developing new products and approaches that really work.

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