Romania’s first non-bank financier for social enterprises gets nod from regulator

The national bank has given its authorisation to the Alternative FINancing Institution, which is looking to support the social economy

Romanian social enterprises, including co-operatives, will be able to secure loans from the country’s first non-bank financial institution dedicated exclusively to social entrepreneurs.

Set up in May 2022, the Alternative FINancing Institution (AFIN IFN S.A) this month received an authorisation from the National Bank of Romania (BNR) and has been added to the bank’s register of non-bank financial institutions.

AFIN IFN is an initiative of Fundația ”Alături de Voi” România (ADV Romania), the European Federation of Ethical and Alternative Banks (FEBEA) and individuals with experience in the banking system and social economy, and has 170 founding shareholders – most of them social entrepreneurs – and will operate as a social enterprise. It has pledged to work in line with a social mission and reinvest at least 90% of its profits to social impact value, and will have a fair wage policy.

Products will include flexible and accessible credit instruments, and a creditworthiness analysis taking into account the economic and financial viability of a project. It will also assess the social impact indicators specific to operators in this sector. At the same time, AFIN IFN promises expert advice to economic operators with social impact to develop their projects and become eligible for credit.

“We are convinced that this new institution, through the operational model we are implementing, will make a decisive contribution to removing funding barriers for this sector and creating the funding ecosystem that the Romanian social economy so badly needs,” said co-founder Bogdan Merfea.

“We will also rely on another important pillar – Social Finance Association, the organisation that was at the basis of the foundation of AFIN, and through which we want to prepare economic operators for a performing lending behaviour and a sustainable development, so that, in time, they become eligible for the banking system.”

According to Romania’s National Institute of Statistics (INS), there are around 205,000 social economy operators in the country, with 165,000 employees. Of these, 20,000 generate income of over €10,000 per year. The Social Economy Barometer found that 20% want access to funding but more than 4,000 operators have encountered barriers in accessing funding. AFIN has set itself the target to lend to 500 entities within its first five years, through tailored and innovative products, and full or partial guarantee schemes.

“We are currently working on finalising all the operational procedures and we estimate that we will be able to start the lending activity somewhere towards the end of the first quarter. We will announce the start of the lending activity and the procedures for accessing the credits through as many communication channels as possible. Credits will also be available to cooperatives which, being social enterprises, are, of course, among our target customers,” confirmed a Felicia Relenschi, CEO of AFIN IFN.