Small and medium-sized businesses in Moldova will have access to cheaper loans through the Fund for Entrepreneurship and Economic Growth of Moldova.
Corresponding amendments to the Law on small and medium-sized enterprises were approved by the government at a meeting on November 9. Along with the Fund of guaranteeing loans for small and medium-sized enterprises, the Organization for Entrepreneurship Development (ODA) will operate an alternative instrument of financing for small and medium-sized enterprises - Fund for Entrepreneurship and Economic Growth of Moldova (FACEM). Its goal is to provide enterprises with access to finance through banks and non-banking credit organizations. This Fund will be formed from budgetary funds; resources allocated by partners and/or donors (credits/loans, financial and technical support, grants); income obtained from crediting and re-lending; usufruct; income obtained from financial investments and other legal sources. ODA will enter into contracts with banks and non-bank credit institutions (except for companies whose main activity is financial leasing) that meet the eligibility criteria and approve them as partners of the Fund. Through partners, FACEM funding will be allocated to support SMEs through the following instruments: loans, full or partial reimbursement of loans (interest, fees, charges, insurance and other loan-related payments borne by the beneficiary) or other financing methods. The amount of funding, eligibility criteria for partners and eligibility of beneficiaries, as well as the organization and operation of the Fund and the use of its financial means will be approved by the government in a separate decree within three months after the entry into force of the bill. The FACEM loan portfolio is expected to total 70 million lei in 2022, 450 million lei in 2023, and 1.3 billion lei in 2025. According to preliminary estimates, through this Fund, until the end of 2025, more than 2.8 thousand beneficiaries will receive loans. Loans will be provided at a reduced interest rate. Such support will help to create new jobs, increase tax deductions and social contributions, and improve the competitiveness of small businesses. SMEs account for 98% of the total number of enterprises in Moldova and provide 60% of the jobs in the country. However, the production capacity of small businesses is significantly lower than that of large enterprises, so they generate only 39% of the sales income of all enterprises in the country. The average annual income of one SME is about 2.6 million lei, which is 108 times less than that of a large enterprise (284 million lei). One of the obstacles for the development of small and medium-sized enterprises is the limited access to finance - this is due to high interest rates and inaccessibility of long-term financial instruments, large collateral obligations, small variety of financial instruments, etc. According to the IMF, the share of bank and non-bank loans to all enterprises in Moldova is about 26.7% of Moldova's GDP in 2020, one of the lowest in the region (lower only in Ukraine - 22.3%), while the share of SME sector loans in Moldova is only 6% of GDP in 2020 (in 2021 - 6.5%). // 10.11.2022 - InfoMarket.
