EU/EBRD MSME (Micro, small and medium sized Enterprises) preparatory action
In support of MSMEs in the new financial environment following the EU accession, a Preparatory Action programme (the Action) supported by the European Commission (EC) has been established. The Action aims to provide medium and long-term financing from the EBRD combined with Technical Cooperation funded by the EC. This combined service will be offered to participating banks and their leasing subsidiaries that intend to develop their MSME finance. A particular focus is put on micro financing. The Action is open to financial intermediaries in the New Member States (Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovak Republic and Slovenia).
The main objectives of the Action are to:
- strengthen and deepen the MSME credit markets and in particular to micro enterprises in the New Member States.
- build financial intermediaries’ ability to extend financing to MSMEs (and particularly micro enterprises) on a sustainable basis;
- provide training to financial intermediaries in order to broaden their capacity to assess and monitor their MSME portfolio;
Transition impact will be achieved by:
- Improving depth and efficiency of financial intermediation and broadening the diversity of financial products offered to MSMEs in the New Member States.
- Contributing to institution building in the participating financial intermediaries.
Financing will be channelled through participating banks and/or leasing subsidiaries of banks in the eligible countries that can demonstrate a satisfactory financial viability, a capable management team and commitment to small and medium-sized enterprises in their lending/leasing policy. Going forward, the framework may be opened to independent leasing companies and micro finance institutions.
EUR 40 million senior debt and/or risk-sharing through framework operations. The proposed EBRD financing will consist of:
- lines of credit to financial intermediaries for financing MSMEs and/or
- risk-sharing on MSME portfolios of financial intermediaries.
EUR 40 million.
Financial intermediaries funded by EBRD under the Action must apply EBRD’s Environmental Procedures for Small and Micro Loans or those for Leasing Companies (as appropriate) to all sub-loans and leases supported through the Action. MSME clients are required to comply with all applicable domestic health, safety, employment, environmental and public information/consultation requirements. The need for financial intermediaries to monitor their clients’ ability to meet current and forthcoming regulatory requirements over the course of the loan will be emphasised in the TC programme. When financing start-up enterprises through the Action, the financial intermediaries will make sure that they are designed to meet national environmental requirements from the outset.
Up to EUR 4 million, to be funded by the EC.
The technical cooperation funds will be used to contribute to institution building through enhancement and streamlining of MSME lending/leasing procedures, training of staff, strengthening of Management Information Systems and marketing strategy, aiming to enable the participating institutions to build long-term capacity to provide financing to MSMEs on a sustainable basis.
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