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Progress Microfinance not reaching social enterprises 13 May 2015

Posted by cooperatoby in Social enterprise.
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The European Progress Microfinance Facility (EPMF) was intended to open up finance to social enterprises as well as other microenterprises. By March last year the 28 EPMF intermediaries had made 13,250 loans worth €125m. However its interim evaluation reports that only 4% of the loans went to social enterprises.

Some reasons for this are that social enterprises don’t make enough profit to repay a loan, and that they require larger loans than other microcredit borrowers (the maximum loan size is €25,000), and hence the lenders demand more collateral, which they don’t have. It notes that in countries such as Bulgaria they lack experience of borrowing and prefer to stick to grants, so instruments combining loan with grant may be more accessible.

The evaluators comment that take-up by social enterprises might have been higher if they had been a higher priority for the microfinance institutions which have benefited from EPMF loans and guarantees.

The EPMF is shortly to be augmented by another fund specifically targeting social enterprises, funded under the EaSI programme.

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