Estonia: MSE Facility

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The MSE Facility supports development of private business by providing medium-term loans to local banks in Estonia for on-lending to micro and small enterprises (MSEs). A technical co-operation programme is available to ensure effective utilisation of the loan proceeds. The Facility aims to increase lending to MSEs in Estonia. The local banks will place at least 50 per cent of the loan proceeds with MSEs operating outside Tallinn. The maximum loan size will be €75,000. An incentive structure (comprising a reduced interest rate) is available if average size of sub-loans is less than €50,000. This incentive can be increased if sub-loans average less than €15,000. The Facility: (i) provides Estonian banks with an incentive to expand lending to very small corporate borrowers; (ii) through provision of TC, faciliates MSE lending by the local banks; and (iii) focuses lending outside Tallinn, with a particular emphasis on regions where commercial lending is less well-developed. The Facility targets financial institutions in Estonia. The programme has been initiated with Hansapank (HP) and Eesti bhispank (EUP), with loans of €10 and €6 million, respectively. The ultimate beneficiaries of on-lending from the banks will be MSEs operating in Estonia. €10 million. The Facility consists of €20 million – 50 per cent provided by the EBRD and 50 per cent by the Baltic Investment Special Fund (BISF). Participating banks will follow the EBRD's Environmental Procedures for Small and Micro Loans in relation to all sub-loans financed through this facility. In implementing these procedures, the banks will assess potential environmental issues associated with sub-projects, which are required to comply, at a minimum, with local/national health, safety, environmental and public consultation requirements. The Baltic TA Special Fund will provide TC of up to €1.03 million to facilitate MSE lending by the local banks.