Providing better access to finance for SMEs

Donor: USAID -  ACDI/VOCA
Partners: Development Fund, local self-government units
Beneficiaries: small and large businesses, local enterprises
Implementation period: August 3, 2023 – August 3, 2024.

Although banks do not have liquidity problems and theoretically have sufficient funds to support small and medium-sized enterprises (SMEs), in practice, banks would rather approve a cash loan to an individual than the same amount of money to a small entrepreneur. The strict risk management policies applied by banks create barriers for small and medium-sized enterprises in accessing financing efficiently. Therefore, the project "Providing Better Access to Finance for SMEs" aims to strengthen small and medium-sized enterprises by improving access to finance through the development of two new programs of the Development Fund.

Local Development Program: Local self-governments are seen as important actors in supporting local enterprises. However, local self-governments often choose to use their budget to award grants to businesses, which is a costly mechanism of support. If these funds were combined with the resources of the Development Fund, it is believed that this type of program would have better effects. Therefore, in collaboration with the Development Fund, a new program will be created where local self-governments can pool their resources with the Fund to finance local enterprises/SMEs.

Guarantee Program: Due to the nature of their business form, SMEs often remain outside the reach of bank loans. Namely, the market for bank guarantees in Serbia is decentralized, which often means that small businesses fail to obtain information about available guarantee schemes. Therefore, in collaboration with the Development Fund, a new guarantee scheme program will be created.

Objectives and Results:

The general objective is to strengthen small and medium-sized enterprises through improving access to finance.

Key project activities:

• The conducted analysis, along with recommendations for enhancing the Development Fund's programs, includes proposals for incorporating new programs, piloting/testing potential new programs, and/or modifying existing ones, along with an assessment of the expected effects of proposed enhancements to key Fund programs.
• Two new programs of the Development Fund have been developed: the Guarantee Program and the Local Development Program.
• Public calls for applications for the programs have been prepared and launched with all necessary documentation.
• The digital tool of the Development Fund has been improved to enable user-friendly online applications for these two new programs.
• Promotion and dissemination of information: Organized conference for the launch of new public calls and presentation of key project achievements;
• At least three information days organized in Belgrade, Novi Sad, and Niš to present the new programs.