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IDB loan expands access to finance for women microentrepreneurs in Peru

The Inter-American Development Bank has approved a $10 million loan to expand access to financial services for women microentrepreneurs in Peru. The loan is part of an expected $30 million loan program aimed at strengthening women entrepreneurship combining expansion of financial services with business training for low-income borrowers.

 Mibanco, Peru’s fifth largest commercial bank and the country’s largest lender to microenterprise, will carry out the program and oversee both the microcredit expansion and the training aimed at women who own or manage microenterprises or small companies in all regions of Peru.

 The IDB loan, from the Bank’s Opportunities for the Majority initiative, is expected to catalyze co-financing for an additional $10 to $20 million through a syndicated and co-loan from international banks and development agencies, with Mibanco further contributing resources.

 The loan will help Mibanco launch a new financial product called Crecer Mi Negocio (To Grow My Business), providing women microentrepreneurs with loans – ranging from a few hundred dollars for medium term investment loans to on average $2000-$3,000 for a business installation – that could  be coupled with training to help make the businesses become more successful.

There will be two types of business training. One will consist of a single training session in basic financial literacy and management that will be offered to over 100,000 low-income women entrepreneurs.

 More advanced education will be available for 450 small business owners with proven skills, who will be given up to 150 hours of training focused on business planning and leadership, through a training model that is being developed by the Thunderbird School of Global Management in conjunction with a Peruvian university.

 The IDB’s Multilateral Investment Fund is supporting the training project for women entrepreneurs with a $3 million grant.

 “Whats innovative about this program is its truly massive scale and its combining of training with microlending to offer an inclusive cycle of support to low-income women entrepreneurs,” commented Susan Olsen, the IDB project team leader.

 Studies have shown that investment in women entrepreneurship has a high impact in reducing poverty, because, among other reasons, women are more likely than men to invest  inhealth and education for their children. Although the loan repayment record for women is better than men, their businesses are 30 percent less likely to survive in Peru than enterprises run by men. One of the goals of the program is to reduce through training the business sustainability gap attributed to gender.