Emigration is one of the most painful problems in Armenia. Unemployment is more severe in country’s regions where the main outflow of the population is observed. One of the most prospective ways for resolving the problem is to set up own business.  “Start-up entrepreneur support” program of the “Small and Medium Entrepreneurship Development National Center of Armenia” (SME DNC of Armenia) Fund is created to support the start-up entrepreneurs to set up their business and attract necessary funds.

Executive Director of SME DNC of Armenia Fund Tigran Harutyunian told Mediamax about the fund’s activity.

- What are the main results of SME DNC of Armenia Fund’s activity in 2010 and in the first half of 2011?

In 2010, we satisfied 8379 applications received from 3711 small and medium enterprises in the following areas of support: provision of credit guarantees (13 operating and 30 start-up enterprises), partial subsidizing of credit interest rates (3 applications), start-up entrepreneur support (130 applications), product and service promotion (49 applications), new technologies introduction, provision of business information (6851 applications), consulting (21 applications), training (1266 applications) and support through Enterprise Europe Network- EEN (16 applications)

In the first half of 2011, we satisfied 1987 applications in the following main directions: provision of credit guarantees (4 operating and 5 start-up enterprises), start-up entrepreneur support (57applications), product promotion and branding, export support, new technologies introduction, provision of business information (1906 applications), consulting and training and support through Enterprise Europe Network –EEN (15 applications).

- How many enterprises cooperate with the fund now? What support does the fund offer them and on what terms?

-We currently cooperate with 200 enterprises on different stages of support. The main directions of cooperation are: provision of credit guarantees, start-up support, product promotion and branding, export support, introduction of new technologies etc.

- Credit guarantees issued by the fund enable the entrepreneurs in the regions to get credits in conditions of shortage of deposits and low liquidity. To what extent is this instrument actual now?

- Our mechanism of issuing credit guarantees has currently become less actual and less effective than at the time we have just started. The mechanism was launched in 2004 when regional enterprises had practically no chances to get bank credits due to lack or actual underestimation of mortgage objects.

The mechanism was very effective at that time; but now, when in conditions of competition the banks focus on regions and reduce the rates and the actual cost of the mortgage property of enterprises increases, our credit guarantees have become less needed.

Today, there are business credits in AMD at the annual rate of 12-13% on the market. Meanwhile, SME DNC of Armenia guarantees up to 70% credit commitments (the principal sum of the credit and interest) which should not exceed AMD 10mln in terms of money. The maximal term for credit repayment is 3 years and the credit rate is registered at the level of 15%.

It is obvious that the mechanism is not competitive in today’s circumstances and we are currently developing a new one: the upper limit of the guarantee is likely to increase from AMD 10 up to AMD 15mln in the nearest future; the credit rate will be floating, and the credit repayment term will increase from 3 up to 5 years. We also consider the possibility of granting discount periods to banks, when only credit interests and not the principal sum are paid off.

Our mechanism of provision of credit guarantees is used mainly by the processors of agricultural production, and we have established effective cooperation with them.

We have 8 partner banks: ACBA-CREDIT AGRICOLE BANK, Inecobank, Anelik Bank, Unibank, Ardshininvestbank, VTB Bank (Armenia), Armbusinessbank and Armswissbank.

-How exactly do you build cooperation with the start-ups?

- Helping start-ups is our major direction. Our certified specialists teach business basics to start-ups in our branches during 2 months every year. The attendees learn how to register an enterprise, draft a competent business plan, pursue entrepreneurship, work with banks etc.

After the completion of courses we consider the business projects of attendees as a diploma paper (figuratively speaking), and approve nearly half of them. The approval supposes provision of credit guarantees to start-ups in the amount of up to AMD 3mln which is quite enough to set up a micro-business. And although they are start-ups recoverability of these credits reaches up to 100% which is attained through competent risk assessment.

The start-up entrepreneur support program is realized in cooperation with the United Nations Development Program (UNDP). This year, the program’s total budget makes $320 000 and the fund’s share makes 60%. We are currently holding negotiations with UNDP to increase the program’s budget and we are striving for equal participation.

- What do start-up entrepreneurs from regions need to get your support?

-They need nothing but a healthy desire and an active business position. We have branches in all 10 regional centers of Armenia. We are glad to accept everyone; we announce the start of the training program beforehand and all those willing to participate (without any exclusion) can get registered. All people who want the training to develop into a concrete business simultaneously work on their own business plan with the help of qualified specialists.

I want to bring the most recent successful example: in the village of Malishka we approved the business project of a girl who had just graduated from the university and intended to open an internet-cafe in the village. The thing is that the half of the male population of the village is working abroad and the communication with the relatives through Skype is very appropriate given high prices for normal telephone communication. According to the business-plan, the project\'s payback would be guaranteed within 3 months. We approved the project and it is currently being realized.

Only in 2011, about 100 start-up entrepreneurs underwent training in our branches throughout Armenia.