More finance for Romanian micro-businesses as EIF and FAER sign loan agreement under Progress Microfinance

The EIF and FAER IFN S.A. (“FAER”) today signed a RON 4.2m  loan agreement (EUR 1 million equivalent) aimed at supporting over 200 micro-enterprises in Romania.

This agreement will allow the Romanian Microfinance Institution FAER to provide enhanced access to finance to micro-entrepreneurs and agricultural producers in rural areas of central Romania.

Progress Microfinance is funded by the European Commission and the European Investment Bank and managed by the European Investment Fund.

Commenting on the transaction, Chief Executive of the EIF, Richard Pelly said: “We are pleased to be already signing a second loan agreement in Romania under Progress Microfinance. This brings our total Progress Microfinance signatures to 9 since inception.

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”.

FAER also supports the development and modernization of agricultural farms and micro-enterprises located mostly in rural areas by helping them to improve business efficiency. FAER Foundation (FAER’s main shareholder) provides agricultural training to farmers and rural communities, which also helps clients to run their businesses successfully.

Chairman of FAER, Ioan Vlasa said: “The loan obtained through Progress Microfinance allows us to respond tothe 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”.

This agreement will allow FAER to significantly scale up its micro-lending activity and to deploy more resources to micro-businesses in Romania.                   

About the European Progress Microfinance Facility

The European Progress Microfinance Facility (Progress Microfinance) provides guarantees and funded instruments to microfinance intermediaries. The initiative is established with EUR 200 million of funding from the European Commission and the European Investment Bank. Progress Microfinance aims to increase access to finance for micro-entrepreneurs, including the self-employed. It has a particular focus on, but is not restricted to, groups with limited access to the conventional credit market. Examples include female entrepreneurs, young entrepreneurs, entrepreneurs belonging to a minority group, entrepreneurs with a disability, sole traders etc. Loans less than EUR 25,000 are made available through selected intermediaries participating in the facility. Progress Microfinance does not provide financing or guarantees to micro-entrepreneurs or individuals directly.

About the EIF

EIF's central mission is to support Europe's small and medium-sized businesses (SMEs) by helping them to access finance.  EIF designs and develops venture capital and guarantees instruments which specifically target this market segment. In this role, EIF fosters EU objectives in support of innovation, research and development, entrepreneurship, growth, and employment. The EIF total net commitments to private equity funds amounted to over EUR 5.4bn at end 2010. With investments in over 300 funds, the EIF is a leading player in European venture due to the scale and the scope of its investments, especially in high-tech and early-stage segments. The EIF commitment in guarantees totaled over EUR 14.7bn in close to 160 operations at end 2010, positioning it as a major European SME guarantees actor and a leading micro-finance guarantor. EIF acts as management company on behalf of EU Microfinance Platform FCP-FIS - European Progress Microfinance Fund, the main vehicle through which the EPMF is implemented.

About FAER

FAER IFN s.a. is a regional non-bank microfinance institution in Romania owned by the FAER Foundation (84.5%), the Post Privatisation Fund (15.4%) and 5 members of FAER’s management.

FAER Foundation is a not-for-profit organisation providing non financial services to small-scale farmers and the rural populations in the same areas of operations as FAER. Its activities provide support to FAER in terms of trainings offered to active borrowers and marketing of the lending services.

Press contact:

EIF: David Yormesor, d.yormesor@eif.org, or visit EIF’s website www.eif.org  

FAER: Ioan Vlasa, i.vlasa@faer.ro  or visit FAER’s website www.faer.ro