EU/EBRD Extension 7 - SME Finance Facility FRW

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The proposed project is an increase of up to EUR 250 million of the existing Facility (currently amounting to EUR 1,100 million). It consists of a framework operation in favour of financial intermediaries incorporated in the EU Accession countries (Bulgaria, Romania, Croatia). The main objective of the Facility is to promote and support sustainability of SME finance through institution building. This is achieved through the combination of three elements: (i) medium and long-term funds provided to participating financial intermediaries (“PFIs”) to facilitate access to finance for SMEs in the eligible countries, (ii) technical assistance to the PFIs to enhance their SME finance ability and (iii) a Performance Fee designed to incentivise PFIs to develop a good quality SME portfolio. The proposed project will be supported by a contribution of European Commission (“EC”) of EUR 24 million, which will bring the total EC contribution to the Facility to EUR 180.75 million. The transition impact of the Facility stems from the following sources: • financial intermediation in the eligible countries by encouraging PFIs to reach out to micro and small enterprises which otherwise face difficulties in accessing finance; • institutional building among the PFIs through the provision of know-how, the development of systems and procedures and the improvement of operating efficiency focused on small business financing; • development of SME financing as a sustainable source of business for PFIs, which will have a demonstration effect in the market. Financing will be channelled through participating banks and leasing companies in the eligible countries that can demonstrate a satisfactory financial viability, a capable management team and commitment to SME financing. Saving and credit cooperatives may also be eligible under the programme. EUR 250 million. EUR 250 million. The PFIs funded by EBRD under the Facility must apply EBRD’s Environmental Procedures for Small and Micro Loans and Environmental Procedures for Leasing Companies respectively to all sub-loans and leases financed through the Facility. The procedures to be adopted include the EBRD’s Environmental Exclusion and Referral List. In implementing these procedures, the PFIs will assess potential environmental issues associated with SMEs, which are required to comply, at a minimum, with local/national environmental, health, safety, labour and public consultation requirements. Up to EUR 10 million, to be funded by the EC under the 2006 contribution. The technical cooperation funds will be used to contribute to institution building through enhancement and streamlining of SME lending/leasing procedures, training of staff, strengthening of Management Information Systems and marketing strategy, aiming to enable PFIs to build long-term capacity to provide financing to SMEs on a sustainable basis. N/A