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IDB loan for $30 million will strengthen small businesses in El Salvador

Program will provide access to co-financing to enable more than 1,000 producers to improve trade capacity

The Inter-American Development Bank (IDB) approved a loan for $30 million to El Salvador to finance the Program to Support Production Development for International Integration. The program’s aim is to increase the capacity of micro, small, and medium-scale enterprises (MSMEs) to participate in national, regional, and global value chains.

The program, which will be carried out by the Ministry of Economy, the Salvadoran export promotion agency PROESA, and the Ministry of Foreign Affairs, will help to improve trade and spur exports of the country’s small-scale producers.

According to Jaime Granados, head of the IDB project team, the priority of the program will be to develop new markets for small entrepreneurs who are able to improve their businesses, including export capabilities. "The most important part is to help MSMEs participate in opportunities offered by trade agreements signed by El Salvador to promote diversification and open markets for domestic production," said Granados.

More than 1,000 small businesses will receive a co-financing in the next four years to enable them to access markets, develop cleaner production, create franchises, and improve labor standards and production quality. In El Salvador there are about 4,500 MSMEs with potential for exports. However, only an average of 84 small businesses receives financial support through co-financing. The program will also contract specialized advisors to help small businesses identify new markets, promote trade, and attract investment.

Resources from the loan will also strengthen systems for quality control and technological innovation to provide businesses with the infrastructure required to guarantee the quality of their products.

The IDB loan has a term of 25 years with a grace period of four years and an interest rate based on LIBOR.