DCFTA (Deep and Comprehensive Free Trade Area) SME Direct Support Facility

DCFTA (Deep and Comprehensive Free Trade Area) SME Direct Support Facility

Project ID: NIF-East-42

SMEs in countries that will enter a Deep and Comprehensive Free Trade Agreement (DCFTA) with the European Union (Ukraine, Georgia and Moldova) continue to have limited access to financing while their financial sectors refrain from offering them adequate products in the local currency and for longer terms. The SME Direct Support Facility combines EBRD and SIMEST loans/equity investments with EU grants provided via the NIF, to support direct SME financing in the European Eastern Neighbourhood. The Facility seeks to improve access to finance by providing guarantees schemes and technical assistance to increase the number of viable projects carried out by SMEs.

The Facility is also vital to support the DCFTA NIF East countries with adaptation to EU rules as per the requirements of the DCFTA. The DCFTA will allow SMEs in these countries to benefit from the liberalised trade in goods and services, with particular provisions for the agricultural sector, infrastructure and energy, as well as corporate governance, transparent procurement, competition and harmonisation of local legislations with the EU laws.

Another important component is the Small Business Support programme, which provides tailored technical assistance and individual consultancy services to SMEs. A large part of the NIF contribution is spent on an EBRD Small Business Support Team to deliver these services to SMEs.

Under this facility, EU finance institutions are expected to provide a minimum of EUR 60 million of innovative financing to SMEs. When combined with the expected contributions from SMEs, the total amount of investments could reach EUR 150 million. With an average size of financing expected to be EUR three million, the project will benefit at least 20 SMEs and possibly up to 50 SMEs.