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••• An article about UMLP in Private Entrepreneur newspaper (¹ 23, December 2009)25.12.2009 |
| ISSUE OF THE DAY It is still possible to receive a bank loan In December 1998 the European Bank for Reconstruction and Development (EBRD) and the German-Ukrainian Fund (GUF) supported by the European Union’s TACIS Programme and the United States Agency for International Development (USAID), have initiated the Ukraine Micro Lending Programme (UMLP). The UMLP aims to foster the development of micro and small enterprises through facilitating their access to bank loans on a permanent basis. Today Ukraine Micro Lending Programme is one of the most successful SME lending projects in Ukraine. We have contacted Ms Yelena Fedak, a UMLP Consultant, to find out more about the Programme’s benefits. - What kind of assistance can Ukrainian entrepreneurs receive in the framework of the Programme? - During such a difficult period of economical recession entrepreneurs try not only to maintain, but also to develop their businesses. But today most of them face a major problem, which is limited access to bank loans. The EBRD’s Ukraine Micro Lending Programme is to support such promising entrepreneurs. Loan experts working in the UMLP partner banks SME lending units actively apply progressive western experience and micro lending technologies, which allows to simplify the loan disbursement procedure and to minimize financial risks not only for banks, but for clients as well, since they too bear significant risk. Our Programme was specially designed to support small and medium businesses in Ukraine. - Why so much attention is paid to our entrepreneurs? - The UMLP management believes that small business is the foundation of the healthy economy of any country. That is why we think that the development of private entrepreneurship is the way to strengthen Ukrainian economy. Since April 1998 small business in Dnipropetrovsk region has received about 66,750 loans totalling more than USD 507 mln in the framework of the UMLP. Today the current loan portfolio of UMLP only in Dnipropetrovsk region amounts to 17,350 loans totalling USD 142 mln. The share of micro loans equals 32%, of small and agro loans together – 12%. The UMLP finances the following types of businesses: trade (72%), production (4%), service providers (14%), mixed (7%) and agro business (3%). The average current loan amount disbursed to one client amounts to approximately USD 8,200. - Could you please name your partner banks, which at the moment provide financing to SME? - The UMLP partner banks disburse loans ranging from USD 200 to 250,000 with minimal collateral requirements. The smallest loan the one can apply for is UAH 1,000. Apart from that our partner banks offer to agro businessmen a unique product called Agro loan, since one of today’s primary tasks of the UMLP is to provide free access to bank credit funds to entrepreneurs in rural areas. The important indicator of our successful cooperation with SME is that clients not only repay their loans in a timely manner, but also apply for new, larger credits, which is profitable both for banks and clients, since the development of business with the help of credit funds is an efficient way to success. - What an entrepreneur has to do to get a loan? - The first step is to file a loan application and to provide the minimum set of documents. As a next step loan officer will visit your place of business. In most cases at this phase it is already possible to identify your need of a loan and the amount required. Loan officers are interested in efficient investment of credit funds, that’s why they are always ready to support you and to give their best recommendations. If the credit commission approves the disbursement, the same loan officer will help you to prepare all the documents necessary to obtain the loan. After that you will only have to get your money and work with it. Let me remind you than in order to get your business prosper you need three things: money, money, and again money. - Are there any obstacles for getting a loan? - There are certain conditions, which must be observed in order for the credit commission to approve disbursement. These conditions are as follows: traders must run their business for at least six months before applying for a loan, while for the service-providers and manufacturers this term is extended to nine months. Clients’ creditworthiness must also satisfy the bank’s requirements. In case entrepreneurs face difficulties and temporarily cannot afford to repay their loans, banks are ready to reconsider loan repayment conditions. - Do banks always demand collateral? - Different banks apply different schemes. But recently, taking into account the difficult economic situation, banks have been mostly requiring collateral. In such cases loan officers pay special attention to client’s financial status. They follow the main rule: “If potential borrower can make money, he will always have some property, which can serve as collateral”. Usually loan officers can estimate the collateral value of property straight away. Any personal property as well as equipment, transport or real estate, which belongs to a client or to any third party, can be offered as collateral. Pledged property remains in client’s possession. The working process is organized in such a way to minimize the possibility of loan repayment at the expense of collateral. And this task is successfully accomplished. – Does the Programme provide for training courses for SME to give more information about banking system and products? – We don’t organize such special courses yet. We provide financial education in a form of seminars, which are of great importance for the rural target audience. But we also have several seminars designed for entrepreneurs running business in cities, helping them to feel more competent when building relationships with banks, such as “How to deal with money”, “How to select a bank”, “How to keep family and business financial records”. Such seminars are held by different banks on a cost free basis. – Thank you for such useful information. Can our readers address to you or other representatives of the Programme for additional information? – No, we cooperate only with our partner institutions. Clients should address banks directly, where loan officers speak clients’ language and are always ready to provide comprehensive information. After speaking with the UMLP representative we talked to entrepreneurs, who have recently obtained loans under this project, in order to get information at first hand about how things actually work. Veniamin Sitov, private entrepreneur from Kharkiv: – My business is passenger transportation. At some point I was in need of funds to purchase two new microbuses. At that time I happened to see a TV spot about UMLP. In September I applied for a UAH loan to Megabank. This time monitoring (analysis of my business and docs) was more serious and fundamental than before crisis, when I have worked with other banks. I think these measures are justified. In a month time I received the necessary amount of UAH 250 thousand at 30% interest rate providing existing transport as collateral. I also like that the bank keeps all the information about my business confidential. In general I am glad that the things got off the ground, that economy is beginning to revive. It means that we will continue to work and develop. Viktor Avulin, private entrepreneur from Dnipropetrovsk: – I run construction business. In June I applied to ProCredit Bank for a loan in order to buy paving slab production equipment and the bank did not refuse. I didn’t expect that the bank would perform such thorough analysis of my financial operations. They calculated my profit and offered me exactly the same amount, which I requested. To my opinion such a serious approach insures the bank against non-performing loans. While for the clients it is an additional confirmation that they have chosen economically reliable partner. It is natural, that the interest rates have gone up. In two weeks I received a loan in the amount of USD 50 thousand at 17% interest rate. Written by Violetta Luniova |
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