vlad.tribnet.com / Issue #148 / Business / Reading article...

While big companies grab headlines with tales of riches and poverty, two loan entities want to concentrate on the little guy.

The European Bank of Reconstruction and Development launched its Small Business Fund in Vladivostok last month. And a krai fund for small enterprises, with similar goals, is attracting more attention than expected, officials say.

Both ventures are trying to develop an economic sector whose success is vital to Russia's financial recovery, said Vyacheslav Butakov, General Director of Inkombank's local branch.

"I would put it figuratively," he said. "The small businesses are small mountain streams, without which the big rivers cannot exist. And the more we develop in this direction the faster our economy will assume a civilized form in terms of structure."

Still, the two funds have big differences. The European Bank's program works like a commercial bank, and seeks profits from its loans. Its Primorye venture is part of a program implemented across Russia which gives loans of at most $125,000 to businesses with no more than 20 workers. The bank trains employees at Far Eastern Bank, Inkombank, and Sberbank to evaluate small businesses that apply for loans. That way, when Eurobank representatives move out, the local banks will continue with the program on their own. Already the European Bank's Small Business Fund has dispersed two loans in the area, and is considering four more.

The Primorsky Krai Fund for Support of Small Enterprises has no loan limit, but will only consider enterprises with 100 employees or less. Like the European Bank, it has strict criteria for loan recipients, but isn't out for profit. Its annual fund of 9 billion rubles ($1.5 million) comes straight from krai coffers. The fund also pays for conferences, seminars, and exhibitions to support small business. A recent expo featured the latest Western-style installment in Vladivostok, the incoming restaurant Vlad Fast Food. Both ventures predict that small business loans will grow. Natalya Yushchenko, exhibition director for the krai fund, said over 400 people came to her last seminar on small business; a year ago, only 20 showed up to a similar event. More than 21,000 small businesses are registered in Primorye, and the number is growing. And though some are destined to fail, many will thrive.

"Small businesses will be the backbone that will compensate for all our economy's problems with growth," Butakov said.