The European Bank for Reconstruction and Development (EBRD) is extending a US$2.5mn credit line to Armenia’s Anelik Bank to support its on-lending to small and medium sized enterprises (SMEs).

Sub-loans to Armenian companies will be for up to US$250,000 and for tenors up to five years. The credit line fills a gap in the fledgling Armenian banking system, which does not yet deliver SME finance on a large and sustainable scale.

Anelik is a medium-sized bank which specialises in SME lending. It is growing dynamically and is now expanding its business to offer credit cards, consumer and mortgage loans. The latest credit line will be used where possible for expansion in the regions, thereby offering finance in remote rural regions.

This credit line, the EBRD’s third SME line to Anelik, falls under the bank’s Armenian Multi-Bank Finance Facility. Anelik’s two previous credit lines were for US$1mn in December 2002 and US$2.5mn in December 2004.

Both were fully disbursed within five months. Due to the high demand for loans under the successful first credit line, Anelik also invested US$600,000 of its own funds which it disbursed according to the conditions of the EBRD credit line.

This project will allow SME companies to receive swift access to reliable finance based on the merits of their entrepreneurial skills and the success of their business, says Michael Weinstein, head of the EBRD’s resident office in Armenia.

“We are happy to continue our strong relationship with the EBRD with this credit line, and, in general, with any potential projects in the future,” adds Samvel Chzmachian, chairman of the board of Anelik Bank. “Lending to SMEs is at the heart of the activity of our bank.”