ES Fund/TISE
Loan Fund for Social Economy
Case study
Warszawa, April 10th, 2014
Content:
1.
2.
3.
4.
About TISE
Social economy in Poland
ESFund/TISE – pilot project
Conclusions and recommendations
About TISE
TISE = Social and Economic Investment Company
Established in 1991 to support the development of the
entrepreneurship and the civil society in Poland
Since 2002 – member of the FEBEA (European Federation of
Ethical and Alternative Banks)
Since 2008 - operates as a loan fund for the social economy and
micro and SMEs, 100% subsidiary company of the French cooperative bank Crédit Coopératif (social finance leading institution
in Europe)
Why TISE?
Over 20 years experiance in cooperation with the social economy
entities, micro and SMEs and in financing the socially beneficial
initiatives
Wide knowledge of the sectors and theirs needs
Expertise in providing financial services (venture capital,
guarantees, loans)
Offering advisory services to the social economy entities and SMEs
TISE’s fields of activity:
 Own regular lending activity for social economy entities and
micro and SMEs
 Financial intermediary of the loan fund for social economy –
(ES Fund/TISE) as well as and of Jeremie and the Operational
Programme for the Development of Eastern Poland (PO RPW)
for micro and SMEs
 Service provider for CoopEst
TISE’s key numbers:
Total balance sheet as of 31/03/2014 - PLN 136 M
(approximately EUR 32 M)
As of
31/03/2014
Social economy
Own funds
Number of
loans granted
Amount
granted
Micro and SME
ESFund/TISE
Own funds
Jeremie and SME loan
funds
205
115
328
392
27,6 M PLN
10,1 M PLN
86 M PLN
57 M PLN
TISE for the SE abroad:
21 loans for the total amount of EUR 1,1 M
in Hungary, Slovakia, Slovenia, Romania
Social economy sector
SE entities
non-governmental institutions (over 76,000 entities, including 7 667 public
benefit organizations)
social cooperatives (~800)
cooperatives of the disabled and the blind (~ 300)
 cooperatives of employees (~ 600 )
ZAZ (Vocational Training Center, 68),
WTZ (Occupational Therapy Workshop, 684)
 other institutions such as:
 associations of local governments,
ecclesiastical legal persons and organizational units running public benefit
activity,
 limited liability and joint stock companies
sport clubs operating as non-profit companies
Social economy sector
SE supporting entities
Public administration bodies – MIR (Ministry of Infrastructure and
Development) and MPiPS (Ministry of Labour and Social Policy)
Regional and local administration authorities (i.e. Warsaw, Katowice)
Supporting specialized entities with no legal personality: OWES (Social
economy support centers) , CES (Social economy centers), KCES (National Centre
for Social Economy), SKES (Social Economy Permanent Conference)
institutions of social assistance and social integration with no legal personality
including: CIS (Social Integration Centers, currently 92 operating entities), KIS
(Social Integration Clubs, 286),
National Association of Social Cooperatives
Loan providers (PAFPIO, TISE, MFES, Regional loan funds – Kujawsko-pomorski,
Dolnośląski, Pasłęk, Nida, etc)
Selected problems
of the social economy in Poland
legal instability
 supporting system at early stage of
development
limited access to external financing
Act on Social Enterprise
Pact for the Social Economy
National Program of Social
Economy Development (KPRES)
Pilot project
- origins
2008 – establishment of an expert team working on system solutions in the
field of social economy.
July 2012 - financing agreement between the Ministry of Labour and Social Policy
(Intermediate Institution) and BGK (state-owned bank - Systemic Beneficiary)
chosen to carry out the project.
In September 2013 BGK invited bids to select financial intermediaries responsible
for providing services directly to the social economy entities in five macro-regions*
covering the whole country. The tender consisted of 5 parts (1 part = 1
macroregion).
* Definded by the expert team based on number of existing NGOs and social cooperatives
Pilot project
- origins
The potential financial intermediaries were obliged to: grant a minimum number of
loans and provide advisory services to a minimum number of social economy entities
(the limits were fixed for each macroregion seperately)
In all 5 macroregions 14 offers were made by 9 institutions and consortia
Criteria in each part of the tender were:
Business plan assessment – 55%
Fund management cost – 38%
Advisory service cost – 7%
BGK has selected TISE to perform the task in all 5 macroregions
In January 2013 BGK signed five agreements with TISE
Pilot project
- objectives
Granting at least 251 loans by 30/06/2015 for the maximum total amount of
PLN 25 M; project deadline – December 2020;
Providing advisory services to at least 200 social economy entities by
30/09/2015; in total 4 000 hrs, total value of the de minimis aid – PLN 400 K;
Creating minimum 50 jobs;
Assessing the financial situation of the social enterprises based on the group
of financed and rejected clients;
Determining the financial needs of the social economy entities;
Checking in practice the risk assessment methodology designed for the
sector proposed by BGK.
Pilot project
– special features
Preferential conditions (interest rate 25% or 50% of the rediscount
rate, no charges, no commision, no extra fees);
For social economy entiites running business activity;
Free counseling after loan granting.
 Regional distribution (five macro-regions corresponding to the areas
of operation of five Social Economy Centres);
Pilot project
- regional distribution
Pilot project
- fixed parameters
Maximum amount:
100.000 PLN
Interest rate:
25% or 50% of rediscount rate (de
minimis aid)
Maturity :
Up to 60 months
Maximum grace period:
Up to 6 months
Maximum financing:
Up to 100% of an investment
Charges and fees:
None
Advisory services
Free of charge (de minimis aid)
Maximum number of hours
30 per borrower
Pilot project
- parties
BGK
TISE
Mentors
Regional and local partners,
institutions and entities
supporting SE entities
Social economy entities
(at least 250)
Counselors
Pilot project
- beneficiaries
1. Entities planning to develop their businesses aiming to achieve
an income or employment growth;
2. Micro or small enterprises;
3. Registered and engaged in economic activities for at least 12
months at the date of loan application;
4. Organized in the form of:
Cooperatives of employees,
Cooperatives of the disabled and the blind,
Social cooperatives,
NGOs,
Ecclesiastical legal persons or organizational units carrying out public
benefit activities,
Non-profit joint-stock companies, limited liability companies and sports
clubs.
Pilot project
- process
Direct contact with the
SE entities
Assistance in loan
applications
preparation
Local
partners
and TISE
advisers
Advisory services for the
borrowers to ensure
sustainable operation of
the SE entities
Ensuring uniform
standards of
assessment
Use of the
existing
support
networks
One
analysis
center
ESFund/TISE
– application verification and assessment
Risk assessment is based on the methodology
provided by BGK under the tender and consists of:
1. Formal verification;
2. Evaluation of the profitability of the project
(business plan, financial projections);
3. Examination of the creditworthiness of the entity
(financial data);
4. Evaluation of securities (a blank promissory note
with a promissory note declaration is a
minimal required security).
Main financial parameters
taken into account:
cash flows,
EBITDA /debt repayment,
debt ratio,
return on sales ratio,
fixed assets to fixed
capital ratio.
ESFund/TISE performance
as of March 31st, 2014
Used allocation as of 31/03/2014
From March 2013 till March 2014:
115 loans granted for the total amount of
over 10,1 M PLN (40% use of funds);
115 business activity development have
been implemented;
156 declared jobs to be created and
sustained;
2.196 hrs declared interest in advisory
services;
ES Fund / TISE – pilot project
time schedule
projection
actual
31.4
35.0
30.0
25.1
25.0
20.1
20.0
15.0
10.0
10 10.1
5.0 5.7
5.0
0.0
31/12/2013
31/03/2014
31/12/2014
30/06/2015
31/12/2017
Loans granting
Providing advisory services
Possible extention of the loan granting period
Portfolio monitoring and project settlement
03/2013
30/06/2015
30/09/2015
2017
2020
ESFund/TISE performance
as of March 31st, 2014
By branches:
10%
9%
Catering and hotel business
Tourism, recreation, culture
Training, consultancy,
education
Medicine and elder care
Other
81%
Service industries
Production
Trade
25%
11%
17%
12%
35%
ES Fund / TISE performance
as of March 31st, 2014
By entities
1%
2%
Foundations
Associations
30%
35%
Cooperatives of
employees
Social cooperatives
10%
22%
Cooperatives of the
disabled
Non profit LLC
ES Fund / TISE – pilot project
effectiveness parameters
Use of funds – 100% by 30/06/2015, at least 125% by 2017
Overdue and lost loans ratio – 15% as of 31/12/2017
Number of loans granted – 250 by 30/06/2015 and at least
~ 380 by 31/12/2017
ES Fund / TISE –
observations after year one
Low maximum loan amount ;
Fixed maximum maturity;
Only investment and job creation purpose can be financed - no
possibility to use a loan for working capital ;
Unavailability for SE entities employing more than 50 employees exclusion of many workers' cooperatives and cooperatives of the
disabled and blind;
Unavailability for entities with no legal personality i.e. ZAZ
(Vocational Training Center);
Unavailability for start-ups
Financing needs
of the Polish social economy entities
Wider range of financial products:
Working capital and liquidity loans;
Investment and development fiancing;
Quasi capital – social VC, subordinate loans, mezzanine;
Bigger amounts
Longer financing period
Available also for: start-ups, enterprises employing more
than 50 employees,
Financial participation of the financial intermediaries