The European Bank for Reconstruction and Development (EBRD) is extending €10 million in financing to Montenegrin microfinance institution Alter Modus, with funds allocated to small and medium-sized enterprises, women-led businesses, young entrepreneurs and green investment projects.
The financing package includes €7 million for general SME lending, €2 million dedicated to women-led businesses and €1 million for youth-led enterprises.
At least 20% of the €7 million general lending facility is expected to support green investments, including energy-efficiency improvements and technologies that reduce resource consumption. The programme is backed by European Union risk-sharing guarantees and technical assistance, while additional support for targeted financing components is provided by Luxembourg and Italy.
The facility is structured to address financing constraints among smaller companies, which account for a large share of Montenegro’s corporate sector but often have more difficulty accessing bank loans than larger businesses. Their limited collateral and shorter financial histories can restrict their ability to secure conventional financing. The dedicated allocations for women- and youth-led enterprises are intended to address the financing barriers faced by these groups.
Green financing under the programme could cover investments in more efficient machinery, building insulation, heating and cooling systems, energy management and other technologies designed to reduce operating expenses. Such investments are also relevant as Montenegro moves towards EU environmental and energy standards.
Businesses are additionally preparing for potentially higher labour costs and regulatory requirements associated with EU accession. Smaller companies may require financing to digitalise their operations, increase productivity and comply with new technical standards. Microfinance facilities do not replace large-scale commercial bank lending, but they can provide investment capital to companies that have difficulty obtaining conventional business loans.
For the EBRD and the EU, the programme offers a channel for directing development financing into Montenegro’s private sector through an established domestic financial institution. The facility’s impact will depend on how effectively Alter Modus directs the funds towards productive business investment, including improvements in efficiency, technology and operating capacity.
