Strategies of the Development of Entrepreneurship and SME

financial support to SMEs can be included in the support infrastructure. Considering to nonbankingfinancial institutions, some part of them get funding from international/foreign donororganizations which task is to support mainly SMEs.Armenian Development Agency (ADA) mainly assists to companies, which are dealingwith foreign investment and import and export activities. Hence large enterprises are still themain target of the ADA’s support.Summarizing the analysis of the SME Support infrastructure it is worth to mention thatthe SME support infrastructure is not complete in the country, having into consideration theabsence of many important components, the absence of linkages, as well as lack of counterinfluence and collaboration between some components of the infrastructure, indifference andinactiveness of the banking sector to SMEs etc.5.2.4. Financing Start-upsSupport to establishment and further development of new businesses has recentlybecome an issue of crucial importance for Armenian economy, although until recent years therewere no mechanisms for financing start-up businesses in Armenia.Despite positive changes in the attitudes of banks, more difficult access of SMEs to loanspersists. The banking sector is placing more emphasis on reducing risks in loans they grant,which is reflected in loans for SMEs. Banks concentrate on financing current operations ofcreditworthy SMEs and perceive increased risks in long-term loans for their investment plans.Moreover, banks and other financial institutions operating in Armenia request to includethe financial history of applicant in loan application in order to get loan. In the result of this,start-up businesses have no chance to get loan from banks.Since 2004 the Government elaborated a program measure on support to start-ups, whichinitially was called “Successful Start” and had technical character (training support). Forimplementation of this program measure the SME DNC of Armenia has collaborated withpartner international/foreign organizations, such as German Project “ProSME”, UNDP throughBSPs selected by tender. This program measure has been mainly implemented throughoutregions of Armenia in order to even out the development imbalances between Yerevan andregions formed in the last decade. Starting from 2005 the scope of this program measure hasbeen enlarged thus containing not only training, but also professional consulting andinformation components. At the ground level start-ups have been assisted by professionaltraining courses and personal counseling in formation of a business concept and developmentof their own business plans. At the end of the program with more succeeded start-upbusinesses long-term cooperation has been conducted. According to statistics since 2004technical support has been provided 282 start-ups, 92 of which have been registered as soleproprietors and legal entities thus initiating entrepreneurial activities in the country.In 2006 for expansion of loaning opportunities for start-up businesses and improvementof loaning terms, the SME DNC of Armenia worked out a mechanism for provision of financialsupport to start-ups and herewith envisaged funding for business plans of start-ups awarded tohigh assesssment. The loaning is performed by ACBA Credit Agricol bank, the partner bank ofSME DNC of Armenia: the maximum amount is AMD 1 million (about 3200 USD), with 12%annual rate and up to 3 year repayment term. The SME DNC of Armenia provides 100%guarantee for loan obligation provided to start-up businesses.Initially for attraction of corresponding financial means negotiations were conductedwith foreign and international donor organizations and with projects implemented by them. Inthe result of these negotiations, for provision of financial support to start-up businesses ''topcapital'' amounted for AMD 12 million was established. For establishment of ''top capital'' AMD95