After boom years with 10% economic growth, Latvia's economy collapsed in 2008 from the effects of the worldwide economic and financial crisis. The country's economic output shrank by 18% in 2009 – a decline more dramatic than in any other EU country. Unemployment increased sharply, reaching almost 20% in 2010.

Since people with low or irregular incomes and no collateral often have difficulty obtaining business credit from commercial banks, it is frequently impossible for them to realise their business ideas. To combat the high unemployment resulting from the financial and economic crisis, the Latvian government decided to use state funds to make it easier for micro enterprises to obtain credit.

• Creation of jobs
• Increase in economic activity

• People who want to found companies
• Self-employed persons

Incorporated companies with annual sales volume of up to LVL 1.4 million (about two million euros) and up to nine employees.

• Self-employed people and micro enterprises with up to nine employees could apply for business microcredit of up to LVL 10,000 (about 14,000 euros). Upwards of LVL 5,000 (about 7,000 euros), the borrower had to contribute at least 10% equity capital. Interest rates were 5-8% per year.
• If the borrower fulfils all the provisions of the credit agreement, repayment of part of the loan – up to LVL 500 (about 700 euros) in larger cities and up to LVL 750 (about 1,000 euros) in rural areas – was waived.

Achieved results:  

• 1,063 microcredits allocated
• 2,650 jobs preserved or newly created
• Only 2,4% of the microcredits were non-performing

Because all goals were achieved, the project was officially concluded at the end of January 2015. The fund is now managed by the Latvian development finance institution ALTUM.

Phase 1 01.07.2011 - 31.01.2015   (Completed)