The Inter-American Development Bank has approved $100 million facility to support small and medium-sized enterprises (SMEs) in Latin America and the Caribbean.
Recently, in a press release, IDB called its SME Financing Facility as the first of its kind, which will provide targeted resources to banks in IDB borrowing member countries to on-lend to SMEs or to guarantee their SME portfolios.
Financing from the IDB’s new facility may be complemented by co-loans, co-guarantees as well as syndicated loans depending on market conditions. The new facility is part of the IDB’s strategy to improve access to finance for SMEs in Latin America and the Caribbean, boost job creation, enhance productivity and strengthen economic growth.
Daniela Carrera-Marquis, Chief of Financial Markets division of the IDB’s Structured and Corporate Finance Department said “The facility provides a new avenue for the IDB to continue channeling resources through financial institutions to further address the unmet demand for financing products and scale up the Bank’s experience in the SME sector by leveraging on the extensive outreach, scalability and sustainable approach of financial institutions in the region.”
The facility will form a pivotal component of the financial markets strategy of the IDB’s Structured and Corporate Finance Department. Moreover, it’s at the center of the beyond Banking program, specifically aligned with the program’s access banking pillar that targets financial deepening strategies for those traditionally under-served by the financial system.
According to IDB, the unmet credit demand by regional SMEs is estimated at more than $100 billion. Micro, small and medium enterprises account for 98 percent of the estimated 17 million formal companies in the region, employing between 60 to 70 percent of the workforce.
