The European Investment Fund (EIF), a public-private partnership that supports financial institutions in Europe that serve small and medium-sized enterprises (SMEs), has agreed to provide a senior loan of RON 4.2 million (approximately USD 1.3 million) to Romanian microfinance institution (MFI) Societatea de Microfinantare Rurala FAER Institutie Financiara Nebancara SA (FAER IFN) through the European Progress Microfinance Facility (Progress Microfinance). FAER IFN is affiliated with Fundatia Pentru Promovarea Agriculturii ?i Economiei Regionale, a nonprofit that aims to support agriculture and SMEs in Romania. The loan is intended to supply access to finance to approximately 200 enterprises.
Richard Pelly, the chief executive of EIF, said, “I am convinced that this funding will help to benefit micro-enterprises especially in rural areas and further contribute to the development of the microfinance market in Romania”. Ioan Vlasa, Chairman of FAER IFN, said, “The loan obtained through Progress Microfinance allows us to respond to the economic needs of the micro-businesses in rural areas in which we operate. FAER is convinced that microfinance is an effective tool to combat poverty and this support from the EU will help to support crucial parts of the Romanian economy”.
Created in 2005 by FAER Foundation, FAER IFN is a regional non-bank microfinance institution in Romania. It is headquartered in Reghin and operates in the provinces of Mures, Bistrita and Suceava, in the Transylvania region. The MFI offers individual loans to farmers, family businesses and small and medium-sized enterprises. As of March 2010, FAER IFN reported a gross loan portfolio of EUR 2.77 million (USD 3.8 million), return on assets of 2.4 percent, return on equity of 8.7 percent and 530 active borrowers.
Progress Microfinance was launched in March 2010 with EUR 200 million (approximately USD 274 million) from the European Commission and the European Union’s European Investment Bank. Managed by EIF, the initiative seeks to increase the availability of enterprise microcredit, particularly for entrepreneurs who are female, belong to a minority group or who otherwise have limited access to conventional credit facilities. Progress Microfinance supports microcredit providers by providing direct funding to increase microcredit lending and issuing guarantees, thus sharing the providers’ potential risk of loss.
By Kristha Abores, Research Associate
About Societatea de Microfinantare Rurala FAER Institutie Financiara Nebancara SA (FAER IFN):
Created in 2005 by Funda?ia Pentru Promovarea Agriculturii ?i Economiei Regionale (FAER), a nonprofit that aims to support agriculture and small and medium-sized enterprises (SMEs) in Romania, Societatea de Microfinantare Rurala FAER Institutie Financiara Nebancara SA (FAER IFN) is a regional non-bank microfinance institution in Romania. It is headquartered in Reghin and operates in the provinces of Mures, Bistrita and Suceava, in the Transylvania region. The microfinance institution offers individual loans to farmers, family businesses and SMEs. As of March 2010, FAER IFN reported a gross loan portfolio of EUR 2.77 million (USD 3.8 million), return on assets of 2.4 percent, return on equity of 8.7 percent and 530 active borrowers.
About European Investment Fund (EIF):
The European Investment Fund (EIF) is a provider of risk finance to organizations that lend to small and medium-sized enterprises (SME) in Europe. The fund is a public-private partnership whose shareholding structure includes the European Union’s European Investment Bank; the European Union as represented by the European Commission; and 29 financial institutions from European Union member states plus Turkey and Croatia. EIF is a member of the EIB Group, the parent organization of the European Investment Bank. As of December 31, 2010, EIF reported total assets of EUR 1.2 billion (USD 1.6 billion).
Sources and Additional Resources:
[1] “More finance for Romanian micro-businesses as EIF and FAER sign loan agreement under Progress Microfinance”, http://www.eif.org/what_we_do/microfinance/news/2011_FAER.htm
“New microcredit provider in Romania under Progress Microfinance”, http://ec.europa.eu/social/main.jsp?langId=en&catId=89&newsId=1091&furth…
MicroCapital.org article, June 30, 2011, “MICROCAPITAL BRIEF: European Investment Fund Loans $7m to Šiauliu Bankas of Lithuania for Expansion of Microfinance Portfolio”, https://www.microcapital.org/microcapital-brief-european-investment-fund-…
MicroCapital.org article, April 5, 2011, “MICROCAPITAL BRIEF: European Commission’s “European Progress Microfinance Facility” Looks to Ease Access to Credit for Small-business, Signs Agreement with Mikrofond AD of Bulgaria”, https://www.microcapital.org/microcapital-brief-european-commissions-euro…
MicroCapital.org article, August 2, 2010, “MICROCAPITAL BRIEF: European Investment Fund Implements $32m Guarantee Under the European Progress Microfinance Facility for Employment and Social Inclusion”, https://www.microcapital.org/microcapital-brief-european-investment-fund-…
MicroCapital Universe Profile: FAER IFN SA, https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Societatea+de+Microfinantare+Rurala+FAER+Institutie+Financiara+Nebancara+SA+%28FAER+IFN%29
MicroCapital Universe Profile: European Investment Fund (EIF), https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=European+Investment+Fund
Browse the MicroCapital Universe and add your entry to the wiki at: https://www.microcapital.org/microfinanceuniverse/
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