The European Bank for Reconstruction and Development (EBRD) is extending a US$3mn loan to the Agricultural Cooperative Bank of Armenia (ACBA) to facilitate access to finance for small enterprises. Through its 10 branches in Yerevan and across the country, ACBA will use the loan to finance local entrepreneurs developing their businesses. The bank will provide “micro” loans worth up to US$10,000 with a maturity of up to two years and “small” loans worth up to US$100,000 with a maturity of up to three years.

The loan is being provided under the EBRD’s US$10mn Armenian Multi-Bank Framework Facility, which aims to support the Armenian banking sector as well as micro and small enterprises (MSEs).

ACBA is the largest bank by capitalisation in Armenia and its primary strategic focus is to provide financial services to small businesses and entrepreneurs. ACBA is a cooperative bank ultimately owned by thousands of individual Armenian farmers, and was created in 1996 to support the agricultural sector. Over time the bank has diversified into providing services to urban MSEs and has built up a loan portfolio of more than US$17mn.

George Krivicky, EBRD director for the Caucasus countries, says that micro and small businesses are key contributors to Armenia’s economic development, and underlines that ACBA plays a critical role in providing a full range of banking services to this important target group. This loan should bring new opportunities to all those entrepreneurs in Armenia who run their own businesses and want to expand or improve their activities, but have until now found it hard to obtain loans from local banks, he added.

Stepan Gishyan, general manager of ACBA, says that the increased lending to MSEs made possible by the EBRD loan underlines his bank’s strategic commitment to the sector, and will help build ACBA’s loan portfolio.

The loan builds on the success of previous EBRD initiatives in the small business sector. The Bank’s first small business lending programme was launched in Russia in 1994 and similar initiatives have since been introduced in 18 countries. More than 400,000 loans worth almost US$2.9bn have been disbursed under EBRD micro and small business programmes.