El Salvador to Drive Digital Transformation and Boost Energy Efficiency of Small Businesses, with IDB Support

Today the Inter-American Development Bank (IDB) approved two loans totaling $190 million to spur technological transformation and innovation and bolster the energy transition at micro, small and medium-sized enterprises (MSMEs) in El Salvador.

One of the loans, for $130 million, funds the Program to Support the Technological and Digital Transformation of MSMEs, while the other, for $60 million, is for the Financing Program for Energy Efficiency and Renewable Energies in Salvadoran MSMEs. 

The first program aims to give approximately 700 MSMEs access to credit so they can adopt advanced digital technologies and gain a more competitive edge on the global market. The second operation will provide medium- and long-term financing to approximately 450 MSMEs to boost their energy efficiency. It will also include technical support to establish a baseline for determining energy savings and greenhouse gas reductions.

MSMEs are a cornerstone of El Salvador’s economy. The country has an estimated 500,000 MSMEs, which create 66% of all jobs and generate 43% of the country’s gross domestic product. But these businesses face significant hurdles like limited access to financing, making it difficult for them to upgrade their technology, adapt to climate change and become more productive and competitive on global markets.

The programs, which have been approved by the IDB Board of Executive Directors, will give these businesses access to the financing they need to overcome these obstacles. The first loan’s resources will be channeled through Banco de Desarrollo de El Salvador, which will then distribute them through commercial banks.

“These two new programs underscore the IDB’s commitment to sustainable and inclusive development in El Salvador. They support MSMEs as they shift toward more competitive, efficient and resilient business models, while at the same time fostering a more sustainable and equitable productive sector in the country,” said Olga Gómez, the IDB Country Representative for El Salvador.

Both projects will include methods for identifying and promoting financing for women-led or women-owned enterprises, which have more difficulty accessing financial resources, especially for innovation and upgrading their technology.

Both loans have a 23.5-year repayment term, a seven-year grace period and an interest rate based on the Secured Overnight Financing Rate (SOFR).