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Access to Finance

Access to Finance

The aim of the Access to Finance component is to create an integrated financial services continuum, with debt and equity financing mechanisms, offering a diverse, complementary, and inclusive suite of small and medium enterprise (SME) financial services through a range of delivery channels and innovative technologies allowing access to finance to SMEs at all levels of the selected value chains.

At its core, Access to Finance works with Armenian financial institution partners, such as Araratbank, Armbusinessbank, and Unibank to help them increase the sustainable availability of lending resources to SMEs that operate in the supported value chains. This is being done through value chain finance approach, which looks at SMEs as part of an interconnected chain of actors in a specific subsector of an industry, rather than just individual firms operating on their own. Financing is thus designed to flow to different actors through the chain, based on their relationships in the production and marketing of a good or service, to support the whole chain’s development and growth. The component hence targets those SMEs that have been identified as key links within the value chains for commercial financing and equity investments.

On the equity side, Access to Finance brings to Armenia access to the Caucasus Growth Fund – a regional 42 million USD investment fund that is managed by the Small Enterprise Assistance Funds (SEAF) though its integration with EDMC. Those Armenian enterprises that are successfully achieving growth and accessing new markets are attractive options for SEAF investments. SEAF Armenia is also working to further develop the equity investment environment, by partnering with local investment firms to leverage its funding and also conducting a Feasibility Study for establishing a locally-managed equity fund.

On the technical assistance side, Access to Finance provides partner banks and other institutions, such as Universal Credit Organizations (UCOs) with tailored technical assistance packages, which include customized SME diagnostic reviews, technical assistance, and training designed to improve the profitability and outreach capacity of their SME lending approaches and activities. Technical assistance is also provided on making profitable loans using cash flow and other non-collateral based evaluation techniques, market research on high potential value chains, and phased consulting for the development of new products to address value chain financing gaps, risk management, credit scoring, outreach, as well as loan underwriting and approval systems.

Access to Finance also works to improve the financial management capacity of value chain enterprises by developing and delivering a best practice-focused Financial Education training course. In conjunction with a partner organization, Access to Finance aims to provide financial education training to 300 SMEs per year in Armenia.

In a targeted manner, Access to Finance is also working with the USAID Development Credit Authority to provide partial loan guarantees to partner financial institutions for increased lending to enterprises in target value chains shaped in a manner that effectively shares risk and avoids moral hazard for the banks. Access to Finance also collaborates with other international financial sector donors – such as the Asian Development Bank – to leverage funding for our partner institutions.

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