ES-L1069 : Financing Access for BOP Shop Owners

The objective of the project is to expand access to finance for micro and small entrepreneurs (mom and pop shop owners) that belong to the base of the pyramid (BoP) in El Salvador, through the provision of productive and working capital financing,. In order to achieve this objective, OMJ will provide a Risk Sharing Facility of up to US$5 million to BA, the FI that will provide loans to these beneficiaries. A technical assistance proposal is being presented to GCM for funding consideration, that aims to improve their business management skills. The Guarantee will provide BA with credit-risk coverage for its downscaling efforts in the BoP segment. The guarantee will be structured as a Risk Sharing Facility (RSF) that will enable BA to introduce and provide new value-added products for BoP microentrepreneurs for: (i) the acquisition of equipment; (ii) physical infrastructure improvements; and (iii) working capital needs. The first loss of the pool of loans will be absorbed by BA, and the IDB and BA will share pari-passu the second loss position.