Georgia’s SMEs Grow with Increased Access to Financing
“We welcome all of those on holiday to relax and enjoy the atmosphere of Bakuriani at our guesthouse,” says Manana Janidze, greeting a visitor at the entrance of the newly upgraded and renovated Hotel X. “We had a small guesthouse and wanted to expand our business. We started the renovation with our savings, but you know how it works: you always run out of money at some critical point.” While she and her husband Andro worked hard to expand their hotel, additional funding was needed to complete the planned upgrade.
The Janidzes approached several banks to no avail. Then, following a friend’s advice, they approached Constanta and quickly received a loan of USD 6,000. The loan enabled them to complete their renovation and equip their guesthouse. “Constanta gave us a hand to improve our business," says Andro. "If not for Constanta, we would not have been able to get a loan so quickly and easily.”
The guesthouse, renovated in time for the winter season, has already hosted more than 50 guests. In order to serve the increased number of guests made possible by the renovation, the Janidzes hired five new employees to ensure that operations run smoothly. The guesthouse now offers eight comfortable rooms from 50-60 GEL a day, which includes three meals. Each guestroom is equipped with a satellite TV, the hallways invite one to relax in sofas and armchairs, and the dining room offers a range of local dishes. The guesthouse is also seeking to reach clients over the internet, forming relationships with tour operators with an online presence.
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| Beneficiary of a USAID portable guaranatee |
“The hotel upgrade has increased our income three times and we are pretty sure we won’t have any problem with loan repayment,” says Andro. In the near future, the owners are planning further expansion, with the development of conference facilities and the addition of a sauna and swimming pool.
Constanta’s ability to lend to small-and medium-sized enterprises (SMEs) was made possible due to a DCA Portable Loan Guarantee under the USAID’s Development Credit Authority. Andro Janidze was one of the first to meet the eligibility criteria to receive credit.
Says Zviad Mirianashvili, Deputy Executive Director at Constanta, “USAID and Constanta formed a partnership in September of 2007 through the use of the USAID DCA Portable Loan Guarantee to make $1.5 million in financing available to small and medium enterprises.”
Countrywide, 580 SME borrowers have benefited from the DCA Portable Loan Guarantee with Constanta and the full amount was disbursed within a month from the date of the signing of the guarantee agreement with USAID. The funds have been extended to borrowers primarily within the sectors of trade (54 percent), agriculture (8 percent), production (8 percent), and service (7.5 percent).”
Dan A. Berkshire, Chief of Party for USAID’s SME Support project, notes, “This partnership enabled Constanta to borrow with the most advantageous terms from an international lending institution to on-lend to SME borrowers.”
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