Greece Launches Microfinance Fund to Support Small Businesses

The institution of microfinance was officially launched in Greece on Tuesday, February 11 during an event held by the Bank of Greece, with the establishment of the Microfinance Fund by the Hellenic Development Bank.

The Hellenic Development Bank established the Microfinance Fund, with aim to provide funding for small businesses with up to 10 employees. This initiative aims to support 3,300 businesses, including 1,000 focused on promoting female entrepreneurship.

According to a European Commission study for the 2021-2027 period, the financing gap in the microloan market in Greece is estimated at a minimum of 578.1 million euros per year, with the figure potentially reaching up to 750 million euros.

These are the funding needs of the country’s small and very small businesses and freelancers, many of whom are currently unable to meet the requirements of traditional banks and may turn to microfinance institutions for support.

Yiannis Stournaras, Governor of the Bank of Greece, citing a study by the European Microfinance Network in collaboration with the Microfinance Centre (2023) revealed that 64% of the customers of European microfinance institutions are located in rural areas.

This indicates that the Microfinance Fund could become an additional tool for the development of the agricultural sector, particularly for new technologies. Stournaras also emphasized the important role of microfinance in empowering and supporting women, who often face significant barriers in accessing financial services.

The microfinance institutions will offer working capital loans and investment project financing ranging from 3,000 to 25,000 euros, with repayment periods between 12 to 96 months and a potential grace period of up to six months. Notably, these loans will not require collateral.

The Microfinance Fund will offer interest-free financing at a rate of 60% for general entrepreneurship and 75% for female entrepreneurship, with microfinance institutions providing the remaining 40% or 25%.

So far, the Bank of Greece has granted three licenses for microfinance institutions, opening the market for microloans up to 25,000 euros in Greece. These licensed companies include T.M.E.D.E. Microfinance Solutions, Microsmart, and AΦΗ Microfinance S.A; additionally, the banks Eurobank, National Bank of Greece, Piraeus, and Attica are also active in the microfinance sector.