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Innovative Financing for Women Entrepreneurs Siv Hellén General Counsel Nordic Investment Bank

Equal Opportunities for WoMen 2004 Nordic Forum in Turku, Finland. Innovative Financing for Women Entrepreneurs Siv Hellén General Counsel Nordic Investment Bank August 12-13, 2004. 1 st loan program. BACKGROUND – 1 ST LOAN PROGRAM.

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Innovative Financing for Women Entrepreneurs Siv Hellén General Counsel Nordic Investment Bank

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  1. Equal Opportunities for WoMen 2004 Nordic Forum in Turku, Finland Innovative Financing for Women Entrepreneurs Siv Hellén General Counsel Nordic Investment Bank August 12-13, 2004

  2. 1st loan program BACKGROUND – 1ST LOAN PROGRAM • The idea was born at a conference in 1999 in Reykjavik called ”Women & Democracy at the dawn of the new Millennium” • The first loan facility of EUR 1 million was established in 1999 under NIB’s Baltic Investment Program • The facility was divided into three equal parts per country • NIB signed agreements with one bank in each country which banks then onlent the money for 44 projects • The facility was fully used up in September 2000 • Surveys were made in all Baltic countries concerning female entrepreneurs

  3. 1st loan program ELIGIBLE PROJECTS • The purpose of the loan program was to support and increase women’s involvement in business and decision-making • The projects were carried out by local SMEs or resident individuals in the private sector • Priority was given to • Projects creating jobs and projects financing SMEs located in rural areas and in regions with high unemployment • Projects involving transfer and exchange of know-how, goods and services between the Baltic and the Nordic countries • Projects involving interaction between women with different backgrounds

  4. 1st loan program FINANCING REQUIREMENTS ANDLENDING TERMS AND CONDITIONS • Requests considered on commercial and economic basis • Focus on the strategy of the potential borrower and the competitiveness of the project idea and also on environmental aspects • Flexibility on the expenditure, but requirement for other financial resources to back the project • Maturities of 5-7 years • Interest rate based on market terms and set by the financial intermediaries • Loans to be adequately secured

  5. 1st loan program LOAN ACTIVITY – SECTOR BREAKDOWN

  6. 1st loan program EXPERIENCE GAINED:WOMEN’S POINT OF VIEW Surveys showed: • Women set up their companies still with own capital • Women have equal opportunities to access credit • Women need more encouragement and support • Women want role models • Women need more information on credit possibilities • Women are more careful and take less risks than men • Women feel that credits for SMEs are in general too expensive

  7. 1st loan program EXPERIENCE GAINED:WOMEN’S POINT OF VIEW • Many women found it positive that the loans were intended only for women and thought this would support women’s entrepreneurship • Some were disappointed with the conditions and requirements, others were positively surprised by the friendly and helpful reception and quick procedure at the banks • 50 % of the women thought they will probably need more financing in the future for their business (expenditure or continuing) • Government support was considered to be important

  8. 1st loan program EXPERIENCE GAINED:BANKS’ POINT OF VIEW • Banks found it difficult to combine profitability and small credits • Banks were not used to address women’s particular concerns • Banks should not give advice on how to prepare business plans • Business plans prepared by external consultants often not of good quality • Women in rural areas with start-up projects were difficult to reach • Loan applicants did not have sufficient collateral

  9. 1st loan program EXPERIENCE GAINED:SUMMARY CONCLUSIONS • Women like to be target clients • Women do not need generally better terms and conditions • Women need good advice in preparing business plans • Women need information about credit possibilities • Banks need training in how to handle women entrepreneurs as clients • Collateral support is needed especially in rural areas and for start-up projects • Expedient loan processing essential

  10. 2nd loan program 2ND LOAN PROGRAM • Provided in equal parts by NIB & CEB • Totally EUR 10 million for the Baltic countries • Estonia: EUR 2 million through one local intermediary • Lithuania: in total EUR 4 million through two local intermediaries • Supported by Finnish Ministry for Foreign Affairs • Latvia: EUR 4 million through two financial intermediaries • Totally 119 projects, maintained 1 786 jobs and created 329 new jobs

  11. Loan Program for Russia • St. Petersburg and Leningrad Oblast area. • Financial intermediary: Vneshtorgbank (VTB) • Program amount EUR 2 million • SME involving women in decision making process • Single loan to a project not exceeding 50% of total project cost or EUR 100,000 • Interest rate based on market terms and margin to reflect the risk of the project. • Maturity not exceeding 5 years.

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