To supplement its efforts in economic reform and private sector development, the Eurasia Foundation has established small business loan programs in Armenia and Ukraine. The Foundation works through local commercial banks to provide financing for manufacturing and service sector projects that create jobs in small, private businesses.
Small business development via lending is a priority area for the Eurasia Foundation since small enterprises have a strong record as an engine of job growth. Throughout the transition economies of Eastern and Central Europe small businesses are a primary provider of new jobs, replacing those lost in the former state sector. To ignore the small business sector is to miss an opportunity to assist in this important element of economic growth.
The small business loan program has two primary objectives:
To support the long term development of the small business sector through local bank lending for capital expenditure investment and long term working capital. To foster institutional development by implementing a credit analysis and collection methodology that allows participant banks to lend in the small business sector with low loan loss ratios and as a result, earn a profit.
The following are the program parameters:
Businesses registered and operating in the countries where the program operates with fewer than 100 employees are eligible. (Joint venture or foreign-owned companies are not eligible.) Loans can be used to finance the purchase of equipment and raw materials. Loans are only made to support manufacturing, services, and agribusiness. (Loans are not made for the purposes of trade.)
Loans are denominated in US dollars for terms up to two years with a maximum loan size of $100,000.
The Eurasia Foundation抯 SBLP seeks to give its participant banks the skills necessary to lend profitably to small businesses engaged in manufacturing and the delivery of services. By learning the lessons of prudent lending, a bank will possess the institutional skills needed to continue lending to small businesses.
For more information about the loan program, contact our lending offices in Ukraine and Armenia.
This document (c) 2000, The Eurasia Foundation.
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