EIF and Mikrofond sign first agreement under Progress Microfinance to benefit Bulgarian micro-enterprises

The EIF and the Bulgarian Microfinance Institution Mikrofond signed a loan agreement today aimed at supporting micro-enterprises in Bulgaria.
This agreement will allow Mikrofond to provide up to EUR 3 million to micro-entrepreneurs, focusing on providing enhanced access to finance to minority groups. Mikrofond intends to provide small loans averaging EUR 3,000 per micro-business in Bulgaria.

The agreement signed is the first investment under the European Progress Microfinance Facility, an EU microfinance initiative which has been established with EUR 200m of funding from the European Commission and the European Investment Bank and is managed by the EIF. EIF provides a long-term loan to Mikrofond which in turn lends to micro-entrepreneurs, many of whom are often facing difficulties in accessing credit from traditional banking sources.

The agreement with the EIF will allow Mikrofond to significantly scale up its existing micro-lending activity and to deploy additional resources, allowing micro-entrepreneurs to set up and run their own businesses.

About the European Progress Microfinance Facility (EPMF)

The European Progress Microfinance Facility is an EU microfinance initiative established with EUR 200 million of funding from the European Commission and the European Investment Bank. EPMF 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 of up to EUR 25,000 are made available through eligible microfinance intermediaries participating in the facility. EIF does not provide direct financing to micro-entrepreneurs or individuals.

About the EIF

EIF was founded in 1994 to support Europe's small and medium-sized businesses (SMEs) by enhancing their access to finance. EIF designs and develops venture capital and guarantees instruments which specifically target this market segment.

The EIF total net commitments to private equity funds amounted to over EUR 4.6bn by September 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 13.6bn in over 160 operations, positioning it as a major European SME guarantees actor and a leading micro-finance guarantor.

EIF has been involved in the microfinance sector since 2000, providing funding (equity and loans), guarantees and technical assistance to a broad range of financial intermediaries, from small non-bank financial institutions to well established banks, to support the sustainability and expansion of their micro-credit activity.

With its activities, EIF fosters EU objectives in support of innovation, research and development, entrepreneurship, growth, and employment.

About Mikrofond

MIKROFOND was established in 1999 as a non-for-profit institution with the financial support of the Open Society Institute and Soros Economic Development Fund.  In 2003, the microfinance activities of the not-for-profit-institution were transformed into a financial company to grow faster and to respond to the microfinance market in Bulgaria. The company is registered at the Financial Institutions Register under Art.3, para. 2 of Law on Credit Institutions
of the Bulgarian National Bank under number BGR00077. The company is a member of the Microfinance Center Poland and of the European Microfinance Network. The shareholders of the company are Microfond-Sofia Foundation (65%) and the Soros Economic Development Fund – New York (35%).

The mission of the company is to provide loans to micro entrepreneurs and to fund low-income or underserved families’ life-cycle financial plans (home improvement, education, health care, etc.) and to maintain good financial results in order to serve the clients in the long-term.

The company provides fixed interest rate start-up loans, agricultural loans, micro-business loans, student business loans and energy efficiency loans through a network of 12 branches throughout Bulgaria.

The clients of the company are start-ups, micro and small businesses and agricultural producers in rural areas and small towns

Press Contacts

EIF: David Yormesor, d.yormesor@eif.org