The EU bank extends a first credit line to Terabank under its SME Outreach Initiative.
The loan reinforces Team Europe’s support for the recovery of Georgian micro, small and medium-sized enterprises from the COVID-19 pandemic by sustaining jobs and maintaining liquidity.
Affordable long-term financing in local currency avoids exposing businesses to foreign currency fluctuations.
The European Investment Bank (EIB), the bank of the European Union, has provided a €6 million loan to Terabank Georgia to support its lending to micro, small and medium-sized enterprises (MSMEs) in the country.
The loan is part of the EIB’s SME Outreach Initiative, which promotes access to finance for micro, small and medium businesses in Georgia by helping smaller banks in the country to offer tailor-made services and financial products to their clients. Terabank is the third bank in Georgia to participate in this initiative.
Covered by a guarantee from the European Union, the EIB financing aims to mitigate the negative impact of the COVID-19 pandemic on micro, small and medium enterprises and to contribute to an economic recovery that puts Georgia on a long-term sustainable growth track. Sustaining jobs, maintaining liquidity and continuing operations are key to Georgia’s faster economic recovery from the COVID-19 pandemic. As part of Team Europe, the EIB works hand in hand with other EU projects implemented in Georgia under the EU4Business brand.
EIB Vice-President Teresa Czerwińska, who is in charge of operations in Georgia, said: “TheEIB is very proud of our continued support for Georgian MSMEs and our role in supporting the country’s economic and social recovery from the COVID-19 pandemic. We are committed to reaching out to our clients through different intermediary channels, and through a range of products including loans, guarantees and technical assistance. We are looking forward to supporting Terabank in its ambition to provide flexible solutions and an exceptional service to entrepreneurs in Georgia.”
Lawrence Meredith, Director of Neighbourhood East and Institution Building, European Commission, stated: ““Access to finance, in particular in local currencies, is key for small and medium enterprises’ (SMEs) recovery from the crisis. I very much welcome the agreement with Terabank as it allows us to increase our outreach, in particular to small SME, women-led SME, and SME based outside of the capital. The European Union continues to stand by the citizens of Georgia and their businesses.”
Thea Lortkipanidze, General Director of Terabank, said: “We are delighted to have taken the first step in our partnership with the European Investment Bank. Support from an influential financial organisation like the EIB and our participation in the SME Outreach Initiative is an opportunity for us to offer even more exciting, affordable and diverse products and terms to our SME clients — Terabank’s strategic segment.”
More accessible loans and increased protection from exchange rate risks for Georgian small businesses
The financing can be made available to micro, small and medium-sized enterprises in synthetic lari, Georgia’s national currency, and can benefit from an EU grant under the Deep and Comprehensive Free Trade Area Initiative. This improves access to long-term affordable financing for Georgian businesses while avoiding exchange rate risks. The EIB plans to complement the loan with a technical assistance component to help Terabank improve and expand its offer available to local small businesses.
Micro, small and medium-sized enterprises are the backbone of the Georgian economy and a major employer in the country, for which limited access to finance is one of the most significant obstacles to doing business. To date, the EU bank has addressed this issue by investing over €300 million in credit lines for Georgian businesses, sustaining more than 54 000 jobs in the country.
The EIB in Georgia:
The EU bank has been supporting the economic and social development of Georgia since 2007, providing some €1.85 billion to the local economy to date. The EU bank’s activities in the country have supported key infrastructure projects (€1 billion), micro, small and medium-sized enterprises and mid-caps (€308 million), municipal infrastructure (€280 million) and green energy generation projects (€23.5 million). COVID-19 recovery activities in 2020 totalled €170 million.
Georgia is one of several non-EU countries eligible to benefit from European Investment Fund (EIF) operations, which are designed to support small and medium-sized enterprises (SMEs) with risk-sharing instruments. Today, the EIB Group portfolio of guarantees in Georgia covers €382.9 million in SME loans.
The EIB finances most projects in Georgia under the EU External Lending Mandate. This provides the EIB with a guarantee covered by the EU budget for projects in the fields of social and economic infrastructure, local private sector development and climate action. Projects may also benefit from EU grants made available under the Deep and Comprehensive Free Trade Area (DCFTA) programme funded by the Neighbourhood Investment Platform (NIP), which, among other things, promotes the EIB’s efforts to make funding available in local currency.
For more information on the EIB’s activities in Georgia, please follow this link.
Terabank in Georgia has been offering superior services to its corporate and retail segments in the country since 1999. With small and medium-sized enterprises as its strategic priority, the bank strives to provide exceptional services that fit the specific needs of the segment. Terabank’s dynamic growth over the years has contributed to the development of both the individual ventures of its corporate clients and the economy at large.
At the Eastern Partnership Foreign Ministers meeting in Brussels, EIB Vice-President Teresa Czerwińska joined EU and Eastern Partnership leaders in confirming a commitment to step up cooperation promoting economic recovery and sustainable investment in the Eastern Neighbourhood, as well as tackling security challenges and the consequences of the Russian war against Ukraine for the entire region.
The European Investment Bank Group (EIB), the bank of the European Union, invested €853 million overall across the Western Balkans in 2021 for sustainable development, the green transition, digitalisation and support for small businesses. Last year, the EIB invested €560 million in small and medium enterprises helping them to recover, adapt and continue to provide employment opportunities. With close to €200 million invested in the Western Balkans’ digital sector since 2020, the EIB Group became one of the major facilitators of the digital transformation in the region. As part of Team Europe, the EIB has delivered on its commitment to inject €1.7 billion to aid faster recovery from the COVID-19 pandemic, ensuring green, digital and sustainable growth.
The European Investment Bank, the Bank of the European Union, will invest up to EUR 34 million in the expanding a high-speed internet network bringing fast and reliable internet services to some 500,000 Georgians living in 1000 rural and remote settlements in Georgia. The investment from the EU bank will finance the installation of 5000 km of fiber optics telecommunications network and provide open-access infrastructure for Georgian telecom operators to provide their fast-internet services. The EU has provided a guarantee through the External Lending Mandate.