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ISSN 2067-3310, E-ISSN 2067-7669 

Vol. 17, No. 2 (2023), pp. 158-169 

 

158 

 

EMPOWERING SMALL BUSINESSES IN GEORGIA: ACCESS TO 

FINANCE, ECONOMIC RESILIENCE, AND SUSTAINABLE GROWTH 
 

N. SURMANIDZE, M. BERIDZE, M. AMASHUKELI, K. TSKHADADZE 

 
Natia Surmanidze1, Mariam Beridze2, Maia Amashukeli3, Keti Tskhadadze4 

University of Georgia, Georgia 
1 ORCID No. 0000-0003-2116-6571, E-mail: n.surmanidze@ug.edu.ge 
2 ORCID No. 0009-0001-9100-2153 
3 ORCID No. 0009-0000-8466-379X 
4 ORCID No. 0009-0005-1051-5168 

 

Abstract: The role of small businesses in the global economy is pivotal, characterized by their 

flexibility, rapid adaptability, and significant contribution to job creation. Small businesses 

worldwide often need help securing funding, particularly in regions with the most pronounced 

financing gap. The article discusses small business financing, emphasizing the importance of capital 

access and the challenges posed by limited options. The COVID-19 impact underscores the critical 

role of financial support for small business resilience. Georgia serves as a case study, exemplifying 

the concerted efforts of government agencies and international organizations in promoting small 

business development. The article examines initiatives like "Enterprise Georgia," the Rural 

Development Agency, and the Innovation and Technology Agency.  The banking sector's role in 

facilitating small business growth and the significance of financial awareness initiatives is examined. 

The article highlights various measures, including the credit guarantee scheme and commercial 

banks' role in enhancing financial access and awareness.  Green banking and capital market 

development for sustainable economic growth are emerging priorities. Green financing initiatives 

and partnerships with organizations like the Fund for Green Growth exemplify a growing 

commitment to sustainability.However, the article also emphasizes the need for a comprehensive 

approach to capital market development in Georgia to diversify financing sources and reduce 

reliance on the banking sector. In summary, this article underscores the indispensable role of access 

to finance in sustaining small businesses worldwide, focusing on the proactive efforts and 

collaborative endeavors in Georgia, providing a blueprint for enhancing small business development 

and financial sustainability. 

Keywords: access to finance, Small businesses,  financial awareness, green banking, capital 

market development. 
 

INTRODUCTION 

Small business is the driving force of the market economy; it plays an essential role in 

developing the global economy. Small businesses' flexibility and decision-making autonomy allow 

entrepreneurs to respond to changes in the environment quickly, expand to new markets, consider 

customer requirements, quickly change directions, and ensure the creation of new jobs because they 

are the leading employers in developing countries. It is the beginning of the process of stabilization 

of the economic situation. Improving access to finance for small businesses is a topic of great interest 

to policymakers and academics. 

mailto:n.surmanidze@ug.edu.ge


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The government, financial institutions, and donors invest in programs to finance small 

businesses. The priority direction of the development of the economic system of Georgia should be 

the creation of appropriate conditions for starting a small business and its development. The existence 

of the mentioned vision will be reinforced by the coordinated actions of the public and private sectors 

in crises, which stimulate the growth of access to finance for businesses and the mobilization of 

finance, in particular, during the Covid-19 pandemic, on the one hand, banks offered the opportunity 

to borrowers to benefit from the condition of deferring the fulfillment of obligations (National Bank 

of Georgia 2023), on the other In turn, the government provided tax subsidies, which would allow 

businesses to reduce costs (Government of Georgia, 2020). 

In order to increase access to finance, the Ministry of Economy and Sustainable Development 

of Georgia created development-oriented agencies. These are Georgia's Innovation and Technology 

Agency, Enterprise Georgia, and Rural Development Agency, whose primary goal is to promote 

small and medium-sized businesses and strengthen competitiveness. Agencies provide financial 

support to small businesses. Starting a business in Georgia is easy, as the World Bank's 2020 study 

shows. Georgia ranks 7th among 190 countries regarding ease of business, while Georgia's 

neighboring countries are far below this indicator. For example, Armenia ranks 47th in the rating. 

Due to the ease of business in Georgia, the number of startups is high. According to the results of the 

July 2023 survey of the National Statistics Service of Georgia, a total of 949,779 enterprises are 

registered in Georgia, of which 233,864 enterprises are active, including 198,812 registered small 

businesses. Accordingly, small and medium-sized enterprises in Georgia make up 97% of economic 

entities. A significant part of the population of Georgia is employed in small businesses. The number 

of employees is 313,125, which is 43% of the total number of employees. These indicators confirm 

that small business plays a significant role in the development of the economy and employment 

(Geostat, 2023). 

For business, it is necessary to mobilize a certain amount of money for development. For the 

smooth functioning of current business activities, it is crucial to pay off the current obligation quickly, 

purchase technologies, establish a modern entrepreneurial culture, and introduce international quality 

standards. These factors are related to business sustainability, measured by one of the indicators, 

financial leverage, which means financing assets with debt. Proper cash management and the ability 

to meet current liabilities on time can contribute to the financial sustainability of a company and 

reduce its dependence on short-term debt. Although modern entrepreneurial culture is not directly 

related to financial leverage, it can indirectly affect a company's ability to attract investors or secure 

financing. A strong entrepreneurial culture that encourages innovation can make a company more 

attractive to lenders or investors, increasing the financial sustainability of the business. Modern 

technologies contribute to the adequate performance of small and medium-sized businesses. Due to 

a lack of cash flow, they must use outdated technologies, affecting their competitiveness. 

Unlike Georgia, external financing sources, especially bank loans, are more accessible to 

small businesses in Poland. In Poland, at the end of 2020, the percentage of firms that did not have 

liquidity problems reached a historical high. More than 62% of companies reported that they had cash 

liquidity at least at a safe level (i.e., 20%), and more than 94.5% of enterprises paid their credit 

obligations on time. There is also a relatively sustainable growth trend in the volume of long-term 

loans for small and medium-sized businesses (OECD-library 2023). 



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RESILIENCE, AND SUSTAINABLE GROWTH 

 

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It should be noted that today's world is actively discussing issues of sustainable development, 

the main component of which is eliminating environmental damage. The green economy model, 

which reduces environmental risks and ecological problems, aims at sustainable development and 

reducing negative environmental impacts. Green economy financing programs are becoming more 

relevant. Currently, banks do not separate green loans in their analytical data. A taxonomy of 

sustainable financing was created under the leadership of the National Bank of Georgia, which 

involves granting loans according to the classification of activities, which means that business 

activities will be classified according to green, social, or sustainable development criteria. The 

sustainable financing taxonomy aims to provide financial support to businesses. 

Small businesses can use financing methods such as a loan from a bank or obtain grants from 

various donor organizations to accumulate the necessary funds. There are no diversified sources of 

access to finance in Georgia, and the primary way for business is bank loans or leasing. It is also 

worth noting that bank credit for entrepreneurs is minimal; as a rule, the smaller the business, the 

more it cannot meet the credit requirements for securing the loan; it cannot even confirm the income. 

Entrepreneurs are forced to apply to microfinance organizations and take loans with high interest 

rates, which hurts their current and future development dynamics. Small businesses need help 

attracting investments necessary for their activities and further development. Access to finance is 

seen as one of the most critical constraints to firm growth. Access to external finance is positively 

related to the growth of small businesses and the dynamics of their development. Entrepreneurs need 

knowledge, skills, and experience to help them obtain finance from formal and informal sources.  

When entrepreneurs are unsatisfied with bank credit, they are deprived of opportunities for 

business development, expansion, and digitization because innovative technologies, acquiring new 

markets, and raising quality standards in production require financial resources. Although there are 

ways to raise funds related to the state, they need more knowledge or often the resources to raise 

grants. That is why the starting point is informing entrepreneurs about the proper communication 

methods. Deciding on financing in a small business is a crucial step, during which entrepreneurs must 

evaluate different sources of financing and be able to select the most relevant source of financing for 

their business. 

The paper aims to study, analyze, and evaluate the challenges and prospects of access to 

finance to ensure the sustainable development of small businesses in Georgia, which includes loans 

and grants issued by institutions responsible for mobilizing finance: banks, microfinance 

organizations, and state and donor organizations. They are responsible for creating an effective 

financing system as the promotion of the SME sector develops small businesses. 

The research questions are as follows: 

1. What are the reasons why entrepreneurs cannot get financial support? 

2. What is the role of banks in small business development? 

3. How easy can entrepreneurs find information about financing projects in their region? 

 

The Crucial Role of Access to Finance in Sustaining Small Businesses Amidst Economic 

Challenges 

Access to finance is vital for small businesses, playing a crucial role in their startup, operation, 

expansion, and development. In an international context, small and medium-sized enterprises (SMEs) 



Natia SURMANIDZE, Mariam BERIDZE, Maia AMASHUKELI, Keti TSKHADADZE 

 

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significantly contribute to economies, employing millions of people and generating a substantial 

portion of the GDP. Small businesses often need help accessing finance, and this constraint can hinder 

their growth potential. In particular, regions like Latin America, the Middle East, and North Africa 

face a significant financing gap, with nearly half of small businesses in need of assistance in securing 

loans (OECD, 2022). 

Access to capital for small businesses can take various forms, including debt financing and 

equity financing, and the availability of such financing options varies across countries. Small 

businesses resort to debt financing in countries where equity financing is limited. However, even debt 

financing options can be limited, pushing small entrepreneurs to seek informal sources of financing 

from friends, family, or community savings and loan associations, known as ROSCAs (Durst, 2021). 

Overcoming information asymmetry is critical in increasing access to financial resources for 

small businesses. Timely, accurate, and complete information empowers entrepreneurs to explore 

different avenues for business development, ensuring they are independent of bank credit. 

The COVID-19 pandemic had a profound impact on small businesses worldwide. Lockdowns, 

social distancing, and business closures led to a sharp contraction in global economic growth, 

affecting small businesses that lacked financial resources the most (Maglakelidze, 2021). 

Governments and banks were crucial in supporting these businesses through low-interest loans and 

other financial relief measures. Many countries, including Georgia, implemented payment deferrals, 

income tax deferrals, and debt restructuring measures to alleviate the financial burden on small 

businesses. 

Collaborations with international organizations like the World Bank and the European Union 

provided additional support to small businesses, helping them weather the economic challenges posed 

by the pandemic. Proactive support allowed many small businesses to survive and adapt creatively 

and innovatively to overcome the crisis. While the pandemic created challenges, it spurred resilience, 

adaptability, and innovation among small businesses worldwide. Governments, international 

organizations, and financial institutions have played a crucial role in supporting these enterprises, 

highlighting the importance of facilitating access to finance and providing assistance during economic 

hardship (Guenther, 2021). 

In conclusion, small businesses are essential components of economies globally, and access 

to finance is pivotal to their growth and survival. Policymakers, international organizations, and 

financial institutions must work together to eliminate barriers to accessing finance, ultimately 

strengthening small businesses' resilience and growth potential.  

 

Government Support for Small Businesses in Georgia: A Comprehensive Overview 

Small businesses in Georgia encounter multifaceted challenges, but government-sponsored 

programs play a pivotal role in supporting their growth. These initiatives aim to stimulate local 

entrepreneurship, enhance competitiveness, and foster innovation across various sectors, focusing on 

access to finance, real estate provisioning, and consultancy services. 

"Enterprise Georgia," initiated in 2014, serves as a cornerstone agency in the country, offering 

substantial support to small businesses. It includes facilitating access to credit, leasing options, and 

utilizing international brand names, helping entrepreneurs surmount financial obstacles. Moreover, 

the program extends grants for technology adoption, product development, research, and the 



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RESILIENCE, AND SUSTAINABLE GROWTH 

 

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promotion of exports. " Enterprise Georgia" has been crucial in cultivating a dynamic business 

environment, spurring growth, and attracting investments (Enterprise Georgia, 2023). 

The Rural Development Agency, founded in 2012, directs its efforts toward providing 

resources and assistance to rural entrepreneurs, particularly in the agricultural sector. Initiatives like 

the "preferential agro-credit program" subsidize loan interest, enhancing entrepreneurs' access to 

financial resources (Rural Development Agency, 2023). 

Georgia's Innovation and Technology Agency (GITA) supports startups and businesses by 

providing grants and educational programs. GITA's involvement has been instrumental in fostering 

the growth of innovative businesses in Georgia, with over 600 startups benefitting from their 

initiatives (Innovation and Technology Agency, 2023). 

To facilitate the integration of Georgian small businesses into the European market, the 

EU4Business - EBRD credit line assists in technology investment, aiding local companies in meeting 

European standards (EU4Business, 2023). The United States Agency for International Development 

(USAID) has long advocated for business development in Georgia. Their "Business Development 

Program," in collaboration with Gazelle Finance, extends interest-free loans and grants to small 

businesses. Additionally, USAID, along with the Kristal Foundation, supports women's 

entrepreneurship through programs such as "Supporting Youth and Women's Entrepreneurship in 

Georgia" (YES-Georgia) (USAID, 2023). These government-backed programs play a pivotal role in 

supporting small businesses in Georgia, enabling them to access financial resources, foster 

innovation, and contribute to economic growth (OECD, 2022). 

 

Banking Sector Support and Financial Awareness Initiatives for Small Businesses in Georgia 

A well-functioning banking system catalyzes small business development and overall 

economic growth by providing liquidity and credit. Banks play a vital role in lending to small 

enterprises, but they often need more information, leading to limited lending, high-interest rates, and 

collateral requirements. To bridge this gap, fostering strong relationships between small 

entrepreneurs and banks is essential (National et al. of Georgia, 2023). 

One critical measure is the state-developed credit guarantee scheme, which enables 

entrepreneurs with insufficient collateral to access loans from commercial banks, agencies, or 

microfinance organizations with state guarantees. This scheme addresses the financing deficit small 

and medium-sized enterprises (SMEs) face. It mitigates market failures, a particularly pressing issue 

in developing countries like Georgia (National et al. of Georgia, 2023). Interest rates on loans 

significantly affect small businesses' access to finance. Georgia faces higher interest rates than some 

other countries, affecting the growth of small businesses. High bankruptcy rates further deter banks 

from lending to this sector (Rakhmonovna, 2022). 

Commercial banks dominate Georgia's financial sector, and while alternative financing 

sources exist, their market share remains limited. Access to bank credit is crucial for SMEs, and 

ongoing efforts to increase their financial capabilities and knowledge are essential. Several banks in 

Georgia offer free business courses covering topics like entrepreneurship, management, finance, and 

digital marketing. These courses aim to enhance financial awareness and strengthen the relationship 

between entrepreneurs and financial institutions (Rakhmonovna, 2022). Innovative services like TBC 

Bank's "Business Guide" and Liberty Bank's "Business Dialogue" provide small entrepreneurs 



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valuable information on financial and non-financial products, training, and business opportunities. 

These initiatives foster strong relationships between banks and small business owners 

(Rakhmonovna, 2022). Collaborative efforts between banks and international organizations have also 

played a significant role in alleviating challenges faced by SMEs. These partnerships have helped 

banks secure funding to support small and medium-sized businesses and encourage the adoption of 

modern technologies and EU standards (FIF - Basisbank DCFTA loan, 2020; Credo Bank, 2023). 

The proactive stance of Georgian banks and their dedication to increasing financial awareness 

and education reflects their commitment to eliminating financing barriers for small entrepreneurs and 

promoting business growth in the country (Netekoveni, 2019). 

 

Green Banking and Capital Market Development for Sustainable Economic Growth in Georgia 

Green banking, encompassing environmental and social protection elements, has become a 

growing priority in financing programs. While only a few Georgian commercial banks have embraced 

green goals and strategies, the importance of green financing is recognized in international markets. 

In 2022, seven out of 13 commercial banks provided information on green loans, with "The Bank of 

Georgia" and "TBS Bank" leading the way by presenting Environmental, Social, and Governance 

(ESG) strategies to align with British requirements (Aslanishvili & Omadze, 2019). 

Procredit Bank has demonstrated a solid commitment to the green economy by establishing 

an eco-department and obtaining the ISO 14001 certificate. This bank funds small enterprises 

investing in energy-efficient, renewable energy, and environmentally friendly projects. Their 

initiative fosters awareness and training on the significance of entrepreneurship in the green economy, 

offering valuable support to environmentally conscious entrepreneurs. 

The collaboration between the Base Bank and the Fund for Green Growth in Georgia is 

noteworthy. This partnership focuses on financing initiatives to enhance energy efficiency and reduce 

carbon emissions. The joint projects have already yielded substantial energy savings and emission 

reductions, contributing to sustainable development (Jishkariani, 2021). Developed countries, like the 

European Union, actively support climate-related programs through various financial instruments 

such as grants, guarantees, and loans. Sustainability initiatives, including creating the High-Level 

Expert Group (HLEG) and developing a sustainable development taxonomy, foster the transition to 

a resource-efficient economy. EU4Business, in collaboration with the EBRD, prioritizes green 

business financing, aiming to reduce energy consumption and increase production efficiency 

(EU4Business, 2023). However, Georgia's capital market development strategy for 2023-2028 has 

some things that could be improved. It does not adequately address external market factors or risks, 

such as geopolitical events, economic trends, and regulatory changes, which can impact market 

development. Furthermore, more emphasis on market infrastructure and regulatory framework 

improvement is needed. A robust regulatory framework is vital for investor protection and overall 

market growth. While the strategy recognizes the importance of the non-government bond and stock 

market, it needs comprehensive plans to diversify the range of financial instruments available. 

Diversification can attract a broader range of investors and stimulate market growth, reducing the 

reliance on the banking sector.  

Overall, capital market development in Georgia is essential for creating a diversified source 

of financing, attracting investment, and reducing the dominance of the banking sector. Initiatives that 

support small businesses, like venture capital funds and the development of green financing, can 



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RESILIENCE, AND SUSTAINABLE GROWTH 

 

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contribute to economic growth and business sustainability (Strategy for the Development of Small 

and Medium Enterprises of Georgia, 2021-2025). 

 

RESEARCH METHODOLOGY 

Qualitative research: Qualitative research is an important part, within the framework of which 

information was collected through interviews with representatives of banks operating in Georgia that 

provide business loans to small entrepreneurs. Five bank representatives were interviewed. The 

existing research results are valid because, in Georgia, eight commercial banks are operating in this 

segment, and the bank with the most extensive small business portfolio has been selected. 

 

RESULTS 

A qualitative study assessed access to finance for small businesses operating in Georgia. 

According to the Tax Code of Georgia, a business is called a small business if its annual combined 

income does not exceed 500,000 GEL (Parliament of Georgia, 2010). Qualitative research included 

interviews with representatives of five Georgian banks that provide loans to small entrepreneurs, 

which provides valuable information. The objective of the qualitative research was to explore the 

opinion of bank representatives about the challenges and opportunities faced by small businesses in 

Georgia in accessing finance. They assessed the barriers that prevent entrepreneurs from getting a 

loan and their level of awareness of various business opportunities. 

One respondent cited a need for more information and effort in collecting documents as a 

barrier to accessing finance. Small businesses may need help to collect the necessary information 

banks require. The respondent perceives proper communication and cooperation between the bank 

and small entrepreneurs as critical. The second and fourth respondents highlighted insufficient 

solvency, sloppy accounting, unsound plans, and poor credit history as barriers to accessing finance 

(Surmanidze, 2018).  The mentioned respondent states that the most common reason among the 

barriers to access to finance is the insufficient financial situation of the entrepreneur, which leads to 

the inability to repay the loan on time. A third respondent highlighted several challenges: insufficient 

revenue, limited collateral, negative environmental impacts, and unfavorable business structures. The 

respondent noted that entrepreneurs are most often refused a loan due to insufficient collateral. The 

factor in which small business operates is also essential; whether business activities hurt the 

environment or human health, such areas are considered risky, and banks avoid financing. "Business 

activity, for example, if it hurts the environment, human health (production of chemicals, bitumen, 

petroleum products, processing-extraction of high-risk inert material, etc.) 

A fifth respondent cited "excessive loan demand, expectations, and risk-taking." Small 

businesses that request loan volumes beyond their revenue-generating capacity may need help 

obtaining financing. In addition, the lack of adequate risk assessment and analysis can prevent loan 

approval. Entrepreneurs need to match the loan request with their financial capabilities and assess the 

risks associated with the loan (Financing SMEs and Entrepreneurs,2022). 

The respondents' responses reveal that banks significantly emphasize the borrower's financial 

ability to fulfill loan obligations. Although banks are trying to promote financial literacy by providing 

various programs and training and helping small businesses strengthen their financial management 

capabilities, the study revealed that this factor still exists as a barrier to access to finance. These 



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factors determine small businesses' financial stability and viability, which is crucial for banks. 

Common factors that hinder the ability to secure financing for small businesses have been identified. 

Among them are lack of information, insufficient solvency, unorganized accounting, unsound 

business plans, insufficient income, collateral limitations, lousy credit history, excessive liquidity, 

and inattention to risks. In almost all of the reasons listed, respondents' answers highlight the 

multifaceted nature of small businesses' challenges. 

All five respondents indicated that their bank loan helps small entrepreneurs expand their 

business and emphasized that this is one of the ways to use the received funds for improvements, such 

as upgrading the infrastructure, introducing new technologies, or improving the product/service 

offering. Also, by investing in the business, entrepreneurs can increase efficiency, competitiveness, 

and customer satisfaction, ultimately leading to improved business profitability. In "business 

expansion," "business development, access to money." The fourth respondent called the loan a cheap 

resource for development. It indicates that the bank representatives believe that the availability of 

loans at low-interest rates allows small entrepreneurs to obtain the necessary funds for the growth of 

their business at an affordable price. This availability can facilitate investments in new equipment, 

expansion of production capacity, and other development initiatives. Thus, respondents believe bank 

loans are crucial in providing cash to entrepreneurs. 

The study reveals the green financing policies of five banks operating in Georgia and 

examines whether small businesses have an advantage in seeking green financing. Four respondents 

indicated that there are special green financing programs in their banks. It shows that these banks 

recognize the importance of financing environmentally sustainable projects and have specific 

initiatives to support such enterprises. Another respondent pointed out that green financing offers 

lower fixed and effective interest rates than standard financing. Moreover, low-interest rates lower 

the cost of borrowing and increase the financial viability of green projects, making them more 

attractive to small businesses looking for financing. "For the most part, the benefit for the entrepreneur 

is expressed in lower fixed and effective interest rates compared to the standard." 

The fifth respondent said that banks encourage businesses to use green loans. Accordingly, 

the bank actively supports small entrepreneurs to implement environmentally friendly practices by 

encouraging green loans. One respondent emphasized that the bank prioritizes financing energy-

efficient and environmentally friendly projects, as they positively impact the environment. In the 

answers of the bank representatives, several opinions were highlighted regarding the advantages of 

loan approval, which are available to small entrepreneurs who have grants from the state or donor 

organizations. However, some respondents emphasized that grant holders do not have an advantage. 

One respondent noted that small entrepreneurs who received government grants benefit from co-

financing benefits, especially regarding interest and collateral requirements. The existence of a grant 

allows entrepreneurs to obtain financing with a reduced financial burden, potentially improving their 

financial situation. Reduced interest expenses can improve cash flow and profitability, which creates 

favorable conditions for the financial stability of the entrepreneur. On the contrary, one of the 

respondents mentioned that small businesses are not in an advantageous position if they own state 

grants because there are not enough conditions to meet the bank's requirements when taking a loan. 

"No, because it is not enough," one of the bank's representatives said that small entrepreneurs who 

received state grants enjoy relatively high trust in the bank. The grant acts as a form of guarantee, 

reducing the perceived risks of financing such entrepreneurs. This confidence can foster a more 



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favorable credit environment, allowing entrepreneurs to access finance more efficiently and with 

better loan terms. Also, small businesses that have received grants from donor organizations are at an 

advantage, as having an organization that oversees the funds can enhance transparency and 

accountability, ensuring the bank's confidence in the proper use of the funds. Such monitoring can 

further reduce the risks for the bank, potentially leading to more favorable credit terms for the 

entrepreneur. "Yes, they are. As the project financing involves an organization that monitors the goals 

of spending funds", the existence of a grant-supported project can provide an additional guarantee of 

the bank, which will contribute to the entrepreneur's favorable position in seeking financing. 

The study also included examining the loan application behavior of grant entrepreneurs. 

Analysis of their answers provides essential information about the practical frequency of loan requests 

by small entrepreneurs with grants. The answers of the bank representatives indicate that requests for 

loans with grants from small entrepreneurs are relatively rare. Several respondents expressed that 

these entrepreneurs often do not seek additional funds through bank loans. "I have had contact with 

only one organization. Therefore, organizations with grants have less frequent loan requests than 

other entrepreneurs." Once entrepreneurs receive a grant, they can rely on the funds provided and do 

not need other resources to support their business activities. 

The responses of bank representatives about the ways and level of awareness of small 

entrepreneurs emphasize that banks use different methods to provide information about projects and 

loan opportunities to small entrepreneurs. Bank representatives named such methods as posting 

information on the bank's website, personal communication with entrepreneurs, advertising 

campaigns, telephone offers, promos, use of Internet banking platforms, and involvement in 

marketing activities. Direct communication through channels such as social media and 

conferences/meetings are also mentioned as ways to provide information to entrepreneurs. The 

responses indicate that banks use multiple communication channels to connect with small businesses. 

This multi-channel approach ensures that information reaches the entrepreneur through various 

means, allowing for greater awareness and access. The combination of online platforms, direct 

communication, and marketing activities reflects the banks' efforts to ensure the dissemination of 

comprehensive and diverse information. Bank representatives gave different assessments about the 

level of information among small entrepreneurs regarding how to obtain financing. Some respondents 

rated it around 6-7 on the scale. "Compared to previous years, the population is more aware of grant 

projects. which naturally increases the number of project beneficiaries". Accordingly, according to 

the bank's representatives, the level of information among small entrepreneurs is moderately 

satisfactory, and some improvement has been observed over the years. However, banks should raise 

the level of information among entrepreneurs. Continued efforts to educate and inform small business 

owners about financing opportunities can support their ability to make informed decisions and access 

the resources they need to grow and develop their businesses. 

The study will also examine the view of bank representatives regarding how business can be 

developed in Georgia. The answers highlight several key factors contributing to the development of 

small businesses in Georgia. According to one of the respondents, diversification of the economy is 

an essential factor. The development of various sectors and branches of the economy is considered a 

decisive factor for the growth of small businesses. A diversified economy gives entrepreneurs more 

opportunities to identify niches, explore new markets, and expand their businesses. "With the 



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development of various branches of the economy, with the development of diverse sectors." 

According to the third respondent, practical business and development-oriented management 

practices are essential for small business success. Emphasis is placed on acquiring the right skills, 

transferring new technologies, and applying global best practices. Small businesses should adopt 

effective management strategies to improve their operations, productivity, and competitiveness. The 

fifth respondent was "competition, seeking more information about the business." Competition plays 

a vital role in the development of small businesses. By actively seeking more information about their 

business sector, market dynamics, and customer preferences, entrepreneurs can identify areas for 

improvement and implement strategies to remain competitive. 

Accordingly, taking into account these factors, small businesses in Georgia can strengthen 

their competitiveness, expand their activities, and contribute to the country's overall economic 

growth. It is important for stakeholders, including government agencies, financial institutions, and 

business support organizations, to collaborate and create an enabling environment that supports small 

business development and success. 

 

CONCLUSIONS 

Small business development has played a crucial role in the socio-economic progress of 

Georgia since its independence. The growth of small businesses led to the creation of jobs and a 

significant increase in the number of employees, and the growth helped to improve the overall level 

of wages, which reflects the positive impact of small businesses on the livelihood of the population 

in Georgia. Access to capital continues to be a significant barrier for small businesses, as Georgia's 

Capital Market Development Strategy (2023-2028) must explicitly address market infrastructure 

development, such as stock exchanges. There needs to be more focus on the regulatory framework 

and more detailed information on improving it. The COVID-19 pandemic has highlighted the 

vulnerability of small businesses and the importance of accessing finance in times of crisis. 

Governments, financial institutions, and international organizations have implemented various 

measures to support small businesses during these difficult times. These initiatives, such as low-

interest rates, loan programs, payment deferrals, and tax relief, were intended to ease the financial 

burden and ensure the continuity of small businesses. In Georgia, specific programs and initiatives 

have been implemented to meet the needs of small businesses, resulting in positive results such as 

reduced liquidation procedures and increased demand for loans. Various agencies in Georgia create 

an entrepreneurial environment that promotes business development. Commercial banks mainly 

dominate the financial sector in Georgia. Therefore, banks are the main financiers of small businesses 

when receiving financing. 

According to the banks, the barriers that make it difficult for entrepreneurs to secure financing 

are lack of information, insufficient solvency, unorganized accounting, unsound operating systems, 

insufficient income, collateral limitations, lousy credit history, excessive liquidity, and risk 

inattention. The research revealed that banks have specific green financing policies and programs that 

enable small businesses to benefit from low-interest rates and favorable terms. Small entrepreneurs 

who have received grants from donor organizations or state grants have an advantage in accessing 

bank loans; that is why it is essential to have a project supported by a grant, which represents an 

additional guarantee for the bank. Based on the findings, the paper can give some recommendations 

to improve access to finance for small businesses in Georgia. 



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They are strengthening financial education: developing and implementing comprehensive 

financial literacy programs for small entrepreneurs by the state and banks. Banks should support 

credit improvement initiatives and provide financial education and advisory services. These programs 

should focus on increasing the business education of entrepreneurs, which includes learning about 

finance, marketing, management, and the loan application process. Small businesses, on the other 

hand, should focus on improving their financial management practices. Promotion of sustainable 

practices: Banks should encourage businesses that engage in sustainable activities to minimize 

adverse environmental impacts. Accordingly, it is essential to develop the supply of green loans 

further. They should conduct informational training because entrepreneurs will understand how much 

priority green business is today. The initial ETPA banks need to give loans at interest-free rates 

because, in this respect, the environmental impact will be eliminated, as well as to promote the 

development of entrepreneurial activities in this regard. 

Raising awareness: Banks need to raise awareness in the regions, giving small entrepreneurs 

a voice about their opportunities because as their awareness increases, so does their involvement in 

programs and entrepreneurial activities. Banks should create activities through which they can reach 

small entrepreneurs directly and provide comprehensive information about projects, as well as 

lending requirements and procedures, and small businesses should make a concerted effort to collect 

and submit the necessary documents. Development of the capital market: The state should develop 

the capital market and consider factors such as geopolitical events, economic trends, and regulatory 

changes. Significant attention should also be paid to developing market infrastructure, such as stock 

exchanges. Diversifying the financial instruments available in the capital market is also essential, 

which can attract a broader range of investors and stimulate market growth. 

In conclusion, solving the challenges of access to finance for small businesses in Georgia 

requires a multifaceted approach involving various stakeholders. By implementing the above 

recommendations, policymakers, banks, and small entrepreneurs can work together to create an 

enabling environment to support small businesses' growth and development. It, in turn, will contribute 

to the overall economic prosperity of Georgia and create relevant business opportunities. 

 

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