News banner image

News

Chile to improve and increase productive financing for MSMEs with IDB help

The Economic Development Agency will channel funds through non-banking financial intermediaries

The Inter-American Development Bank (IDB) has approved a $120 million loan to help Chile improve and increase its supply of productive financing instruments for Micro, Small, and Medium-sized Enterprises (MSMEs). The lending is part of a package of measures recently announced by the Finance and Economy ministries aimed at boosting firm productivity.  

To this end, the Chilean Economic Development Agency (CORFO) will channel resources to MSMEs through Non-Banking Financial Intermediaries such as factoring companies and savings, lending and leasing cooperatives. 

“The project seeks to boost both supply and competition in Chile’s financial market with a blend of financial instruments focused on MSMEs needs in order to improve their productivity,” said IDB’s project team leader Diego Herrera. 

The operation was launched in collaboration with the Inter-American Investment Corporation and the Multilateral Investment Fund and has three components –a factoring element, a MSMEs lending element, and a leasing element. 

The factoring component ($50 million) will be assigned by CORFO to fund eligible entities that neither belong to nor are associated with banks, which will use it to finance MSMEs working capital. 

The lending component ($50 million) will finance eligible Savings and Lending Cooperatives, which will use these resources to supply medium and long term financing to MSMEs’ investment and eventually productive reconversion plans. Part of the resources will also go to finance the operations of microfinance institutions and of productive or service cooperatives engaged in the financial intermediation business.

The third component ($20 million) will fund eligible leasing companies that neither belong to nor are associated with a bank to help them finance MSMEs medium and long term assets and investments. 

The amount of each component can be changed by CORFO during the project’s execution depending on demand and could also be used to supplement the agency’s efforts in other current or future programs aimed at fostering MSMEs innovation, certification and training, or in any other initiative or intervention seeking to boost up corporate productivity.

About us

The Inter-American Development Bank is devoted to improving lives. Established in 1959, the IDB is a leading source of long-term financing for economic, social and institutional development in Latin America and the Caribbean. The IDB also conducts cutting-edge research and provides policy advice, technical assistance and training to public and private sector clients throughout the region.