To help channel funding to smaller businesses, including women-owned small and medium enterprises (WSMEs), IFC is providing €20 million to Patria Bank, a bank listed on the Bucharest Stock Exchange, as part of its larger efforts to spur economic growth and support small-scale entrepreneurs in Romania.
Under this new agreement, the bank—serving micro, small, and medium enterprises (MSMEs), as well as agro and retail customers—will use the proceeds of the IFC loan to ramp up lending to SMEs, helping them unlock their growth potential. Around 50 percent of the funding will be earmarked for WSMEs, targeting rural areas of Romania.
Though the situation has improved over the last decade, access to finance is still a major challenge for MSMEs in Romania, with a finance gap that is more than twice the current MSME loan volume. Most small firms, especially those owned and led by women, are marked by low labor productivity and growth, which can often be attributed to limited access to finance. Moreover, MSMEs in the country have been severely affected by the lockdowns, increased uncertainty, and an economic slowdown in the wake of the COVID-19 pandemic.
“One of the strategic priorities of Patria Bank Group is to support the entrepreneurial environment in Romania. We focus all our efforts to provide development opportunities for the businesses of our customers and sustainable tools to help them face the challenges of the macro-economic environment. The strategic partnership with IFC helps our vision to support the entrepreneurs from Romania and women entrepreneurs, in particular. In the next 5 years our ambition is to double the volume of loans granted to this segment and will focus on supporting female entrepreneurship by facilitating them access to financing sources,” stated Burak Yildiran (photo), CEO of Patria Bank.
IFC’s current investment will help reinforce Patria Bank’s ability to reach underserved segments of the Romanian population. By creating new financing options for MSMEs, the loan will not only help close the financing gap but also support job creation and a more favorable private sector, essential for economic growth, especially post-COVID.
“As the economy starts recovering, MSMEs will need access to capital, key to financing investments in inventory and inputs to resume economic activity, as well as to adjust business models to the post-crisis economy,” said Ary Naïm, IFC’s Regional Manager for Central and Southeast Europe. “At a time like this, we are confident that our partnership with Patria Bank will help strengthen the local entrepreneurship ecosystem in Romania, boosting economic resilience.”
IFC has supported private sector development in Romania for over 30 years, with a committed exposure of $1,290 million as of October 2022.