Loan Fund Program

Our Center has long recognized the lack of capital available for SMEs - especially for young businesses and start-ups -- as one of the major obstacles in development of a prosperous business community in the region. Despite gradual improvements in commercial finance, there remains a deep need for access to loans based on reasonable conditions. Banks shy away from these clients, because they lack a sound business history. Direct lending to SMEs by banks is focused on well-established businesses.  

In 2001, the Center, in a consortium with two other organizations, won a competitive bid for providing business development loans, as a part of governmental support to employees terminated from the region's shrinking heavy industries. The Center, as well as the other collaborating agencies, found only limited interest in this program from within the targeted population group, but observed great interest in the program among entrepreneurs and unemployed people from other economic sectors. The program was extended to serve them. Subsequently during the years 2001 - 2002 of program implementation, the consortia approved 74 loans to SME starts-ups and entrepreneurs totaling more than US$1,000,000. These credits helped to open 37 new businesses and create 158 job positions. This program convinced us of the continuing need for such a local loan fund.  

In 2005, with generous support from a private US foundation the Center was able to develop a new Loan Fund program offering loans to business start-ups and SME up to US $18,000 for a period of up to 5 years. The interest rate is sub-market. The pure interest rate charged is 6,42 % (May 2008); in addition to a 2% commission and charges for loan application documents and loan appraisal services.  Since its establishment up to May 2008, the Center's Loan Program has issued 71 loans.