EURASIA TARGETS SMALL BUSINESS

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**August - September 1998**
By Paul Moran
Throughout the New Independent States, entrepreneurial activity is growing and small businessesare beginning to succeed.  Yet serious impediments remain. Lack of basic know-how and lack ofaccess to capital are two immediate obstacles facing entrepreneurs. Through its grant making andlending activities, the Eurasia Foundation is working to help overcome these problems.
The Eurasia Foundation, which began operations in 1993, makes small grants that encourage arigorous small business sector in the NIS, facilitate the transition from centrally planned to marketeconomies, and improve the flow of information available to NIS citizens. Among other priorityareas, Eurasia grants target small business development, management training, and facilitatingelectronic communications. 
**Training New Entrepreneurs**
When Nadezhda Zaichenko wanted to open a garment shop in Tula, 100 miles south ofMoscow, she realized she needed training in business fundamentals.  "I didn't know how todo the accounting or the taxes for a business," she said.  "Everything was a fog."  A grantby the Eurasia Foundation provided her and 29 other budding entrepreneurs with thebusiness training necessary to operate and expand their small businesses.  
In late 1996, Eurasia awarded the Training and Business Center in Tula a $23,450 grant   one ofthe almost 600 business development grants the Eurasia Foundation has awarded   to support thebest business ideas in the region. Zaichenko and other winning applicants attended an 11-weektraining class in business management, accounting, finance, taxation, insurance, and business planwriting. 
According to Zaichenko, a former schoolteacher, the training gave her both the confidence andknowledge to turn what had been a hobby into a successful business.  "I wasn't very sure of myself,but the trainers showed me how to do everything, and I realized it was not so difficult or dangerousto start a business," she said, proud that her profits have quintupled over the past few months.
**Providing Capital to Small Businesses**
Three years ago the Eurasia Foundation launched the Small Business Loan Program (SBLP) toprovide small businesses with access to capital.  The program's overall goal is to offer crucial supportto struggling small businesses and help create jobs in economically depressed areas. Working inpartnership with local banks, the Small Business Loan Program currently operates in Armenia, Russia,and Ukraine.  Loans are denominated in dollars and generally range from US$15,000 to US$100,000,with the average size less than US$30,000.  
The story of Armenian company Sargisian and TL illustrates the impact small loans can have on thegrowth of small businesses.  In 1994, brothers Armen Safarian and Sabri Sargisian started Sargisianand TL, a manufacturer of wooden doors and windows in Yerevan, Armenia.  As orders began togrow, they decided to expand the business to include living room furniture, but it soon became clearthat the company desperately needed capital to reach its new goals.  As a result of a US$24,000 loanfrom Eurasia, the company was able to meet the increasing demand for its products and provide 24new jobs for highly qualified specialists.
The SBLP does more than simply provide loans to small businesses.  According to program directorBill Grant, "The program shows participant banks how to lend profitably to the small businesssector."  The partnership arrangement allows local banks to initially share equally in the loan decision,credit risk, and interest earnings while learning proven credit analysis and collection methodologies. The SBLP is designed to gradually withdraw by lessening its oversight role and share of loan risk. The local bank's share of the loan risk will rise to 100 percent over a two- to three-year period as itsability to analyze, monitor, and collect loans increases. 
**How the Eurasia Foundation Works**
The Foundation works at the micro-economic level to support the development of smallbusiness; to help regional administrations develop adequate laws to support business growth;and to spark the nonprofit sector that provides an important bridge between business andgovernment.
Currently funded by a mix of public and private donors, the foundation has awarded more than 2,800small grants, more than 85 percent of which were made directly to NIS organizations through thefoundation's field offices in Almaty, Baku, Chisinau, Kyiv, Minsk, Moscow, Saratov, Tashkent,Tbilisi, Vladivostok, and Yerevan.  The foundation awards grants totaling approximately US$18million per year.  The SBLP has made 110 loans totaling over US$3 million.
To learn more about the Eurasia Foundation's programs, contact the foundation's Washington,D.C. office at 202-234-7370.  For further information about the Small Business Lending Program,contact Bill Grant at 202-234-7370 ext. 112.  More information may also be found at thefoundation's website www.eurasia.org, and through BISNIS OnLine atwww.mac.doc.gov/bisnis/finance/finance.htm. 
Paul Moran is Development Coordinator with the Eurasia Foundation in Washington, D.C. 
***This report is provided courtesy of the Business Information Service for the NewlyIndependent States (BISNIS)***