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IDB backs program to give SMEs in Paraguay greater access to credit

Loan of $30 million will help improve business skills and boost the country's productivity

The Inter-American Development Bank (IDB) has approved a $30 million loan for a program to help boost productivity in Paraguay, by giving small- and medium-sized companies greater access to credit over the medium and long term, and to improve their business skills.

The Financing Program for Small- and Medium-Sized Companies in Paraguay calls for $20 million for the Propyme financing product run by the Development Financing Agency and $8 million for the Guarantee Fund for Small- and Medium-size Companies.

“The project seeks to provide a set of a tools that are fundamental for the development of small- and medium-size companies, both through medium- and long-term credit to support their investment plans and improvement in their business skills and their profile as candidates for credit in the financial system,” said Francisco Demichelis, the IDB project team leader.

The Propyme product will finance investment projects and associated working capital. It will also support small- and medium-size companies that have had access to short-term financing but not over the medium and long term.

The Guarantee Fund will support those companies that have not received any kind of credit from the financial system because they do not have eligible guarantees.

The program will provide technical assistance to launch a pilot aimed at improving management and technical skills and develop business plans so that small- and medium-size companies can receive credit.

The $30 million IDB loan is over 25 years, with a grace period of five-and-a-half years and an interest rate pegged to the LIBOR.