SME Support

All SME Programs implemented by GAF comply with GAF's
environmental review guidelines for SME finance projects.

SME support program financed by KfW

The Program aims at developing of Armenian financial sector, in particular to provide Armenian financial institutions with relevant resources to make the SME lending more efficient and profitable. The Program also aims to introduce new lending technologies in the Armenian financial sector as well as to support training and continual development of their credit officers.
The Program was established within the framework of the Intergovernmental Agreement “On financial cooperation” concluded between the Federal Republic of Germany and the Republic of Armenia in 1998, in accordance with the loan agreement concluded between KfW and the Central Bank of Armenia. Within the cooperation, the Central Bank of Armenia has received from KfW in total EUR 16.8 million credit line for 40 years, and 10 years’ grace period.
The lending within the Program is based on refinancing principles, which means that the Partner Financial Institutions (PFI) first provide loans out of their own funds, and afterwards apply to PMU GAF for refinancing. If the provided loans comply with the Program requirements, the Central Bank of Armenia refinances those loans. It is required that the PFIs’ loans to SMEs are provided in local currency and at market rate which are being refinanced by GAF in local currency, with up to 5 years’ maturity.
Besides the financial component, KfW also provided grant funds for financing the technical assistance to PFIs. IPC international consulting company was selected as the Program consultant in 1999. The consultant, in close cooperation with PFIs, elaborated new lending technologies and implemented them within nearly 6 years. Contrary to the collateral based lending mechanisms which existed before the program inception, the consultant elaborated and introduced a completely new approach based on SME business analysis, where the collateral was not the primary criteria of creditworthiness assessment. The introduction of the new technology enhanced the transformation of the business lending in Armenia and boosted the commercial banks’ development.
After the full disbursement of the loan funds, the process of refinancing continued out of the means accumulated at a special revolving fund, consisting of the repayments made by the PFIs. Since the program inception till 31 December 2020, the Program PFIs have provided in total of 75,723 loans amounting AMD 293 billion.
11 PFIs participate in the Program – 10 commercial banks and 1 credit organization.

SME support program financed by RA Government

Based on the successful experience of the GAF-MSME program, in December 2008 the RA Government allotted GAF an additional AMD 15.2 billion in loans within the framework of the anti-crisis measures, with a view to supporting small and medium private enterprises in the Republic of Armenia (GAF-MSME-Gov). Within the framework of this program, lending is carried out with the technology of GAF-MSME-KfW Program, under the same crediting conditions. Program closed in November 2013.

Access to Finance for SMEs by the World Bank

Within the framework of the anti-crisis measures in the Republic of Armenia and aiming to foster small and medium entrepreneurship in the RA, an agreement was concluded between the Central Bank of Armenia and the International Bank for Reconstruction and Development (member of World Bank) on February 26, 2009, on providing USD 50 million. The main purpose of the "Access to finance for small and medium enterprises" program (GAF-MSME-WB/AFSME) is to maintain or enlarge the availability of loans to small and medium enterprises, thus fostering their growth. The loan was granted with a term of 26.5 years. Based on the standards set out by the World Bank, 8 partner banks were selected with which respective Master loan agreements were concluded.

Women’s SME Support Program by Asian Development Bank

Within the framework of the ADB “Women Entrepreneurship Support Sector Development” Program on 25 January 2015 a new loan agreement was signed between the Central Bank of Armenia and Asian Development Bank with total amount of USD 20mio. The program is aiming to stimulate entrepreneurship development among women via the financial system of Armenia thus increasing the availability of national currency funds for women-owned SMEs. For considering SMEs as women-owned SMEs they should meet at least one of the following criteria: at least 50% of the enterprise should be owned by women or at least 60% of the executive body should consist of women or at least 50% of the employees should be women.
At least 50% of the Program funds should be disbursed to women-owned SMEs. For the program implementation 5 partner financial institutions have been selected by the Central Bank of Armenia and Asian Development Bank with whom appropriate loan agreements have been concluded. The loan is provided to the Central bank of Armenia for 31.5 years.

Agriculture and tourism finance Program by European Investment Bank

The Program is implemented within the framework of EUR 50 million (USD 62.5 million) loan agreement signed on the 4-th of December 2014 between the European Investment Bank and the Central Bank of Armenia. The objective of the Program is financing the Armenian SMEs operating in the field of agriculture and tourism. The control and management of the Program is implemented by the “German-Armenian Fund” Program Management Unit of the Central Bank. The loans to the PFIs are disbursed in local currency with up to 7.5 years of maturity period and principal repayment in the end of the loan term. The loans that are in line with the Program’s eligibility criteria provided by the PFIs, may be refinanced by GAF not later than after six month of the initial disbursement. The beneficiaries of the Program are the SMEs with less than 250 employees. The loan under the Program should satisfy the following conditions: provided in local currency (AMD), be not greater than equivalent of EUR 1 million and have not more than 7.5 years of maturity and 2 years of grace period.