Cyprus to establish business development organization to aid SMEs

The Cypriot government is moving forward with the establishment of the Cyprus Business Development Organization (KOAE), a new financial entity designed to provide support and funding to small and medium-sized enterprises (SMEs). While the legislative framework was passed by Parliament several weeks ago, officials expect the organization to be fully operational within twelve to eighteen months. The entity aims to bridge the current funding gap for SMEs, which often struggle to secure loans or investment capital through traditional commercial banks.

The Cabinet of Ministers is expected to appoint a seven-member Board of Directors by the end of August 2026. This appointment is a critical prerequisite for Cyprus to unlock €69 million in funding from the European Recovery and Resilience Facility before the year-end deadline. The board will initially serve a two-year transitional term and will include five members proposed by the Minister of Finance, alongside two ex-officio members from the Ministry of Finance and the Deputy Ministry of Research, Innovation and Digital Policy. Once established, the organization will focus on developing financing tools, designing support plans, and setting specific eligibility criteria for businesses seeking assistance.