The European Bank for Reconstruction and Development (EBRD) is lending US$1mn to Armenia’s InecoBank to help it provide finance for local entrepreneurs planning to develop small businesses.

Mike Davey, the EBRD’s country director for the Caucasus, Moldova and Belarus, says: “The loan will help Armenian entrepreneurs get much-needed access to finance to grow their businesses, and also contribute to the strengthening of the Armenian financial sector.”

Fast-growing InecoBank, founded in 1992 to provide financial services to micro and small enterprises (MSE), is the fourth bank in Armenia to benefit from a loan from the EBRD under the US$10mn Armenia Multi-Bank Framework Facility. This loan replicates previous successful small business initiatives, now operating in 19 of the bank’s 27 countries of operation from Central Europe to Central Asia.

InecoBank will provide micro loans of up to US$10,000 with a maturity of up to two years and small loans of up to US$60,000 (or the equivalent in Armenian dram) with a maturity of up to three years.

Avetis Baloyan, chairman of InecoBank, says: “InecoBank is committed to servicing the dynamic MSE sector in Armenia, and we look forward to providing finance to this niche market with the help of the EBRD. The EBRD loan will increase InecoBank’s funding for MSE lending and trigger further growth in the loan portfolio as well as increase access to finance for micro and small entrepreneurs.”

Michael Weinstein, recently appointed head of the EBRD’s resident office in Yerevan, says that micro and small businesses were a very important driver of economic development in Armenia and welcomed InecoBank’s contribution as a provider of finance to MSEs.

InecoBank is one of the most profitable banks in Armenia. ShoreCap International, a US-based investor with a focus on SME finance, recently took a 15% stake in the bank. InecoBank also has access to EBRD’s Trade Facilitation Programme, which enables the bank to service its existing client base and attract new clients by offering guarantees without cash backing.