Resources for Businesses

Resources for Businesses

Resources for Businesses

Frequent Asked Questions

Inter-American Investment Corporation (IIC)

What is the relationship between the IIC and the IDB Group?

The Inter-American Investment Corporation (IIC) is a member of the IDB Group. It is the only multilateral institution that has an exclusive focus on providing direct and indirect financing to small and medium-sized enterprises in Latin America and the Caribbean. It is legally independent from the IDB Group, with its own management and resources.

What is the target market of the IIC?

The IIC focuses mainly on small and medium-size enterprisesin one of the IDB’s 26 member countries in Latin America and the Caribbean. Itprovides financing and technical assistance so SMEs can grow and drive development in the region and expand themselves geographically in key sectors.

The IIC finances companies that are profitable, have growth potential, have audited financial statements, and comply with national labor and environmental regulations. It finances projects that are financially feasible and profitable and environmentally sound. It also offers financing for financial institutions which use the IIC’s resources to lend to small and medium-sized companies in Latin American and Caribbean member countries.

What sort of corporate projects does the IIC finance and in which sectors?

The IIC supports operations in a wide variety of sectors such as agriculture and agribusiness, aquaculture and fisheries, chemicals and plastics, food and beverages, energy, education, healthcare, infrastructure, livestock and poultry, wood, pulp and paper, manufacturing, industrial processing zones, and textiles, as well as financing through supply chains, among others. On a limited and selective basis, the IIC also finances greenfield projects.The IICdoes not finance projects related to arms manufacturing and trade, gambling, and real estate speculation.

IIC financing may be used for both local and foreign currency investments in fixed assets, permanent working capital, and pre-operating costs. For more information visit the IIC’s Mission Statement.

What financial products do the IIC provide?

The IIC offers the following financial products:

4.1. Direct Loans to medium-sized companies:

Terms:

  • Amount: between $1 million and $20 million. In some markets, this transaction can be complemented with syndicated loans
  • Currency: U.S. dollars and in local currency in certain markets
  • Term: 1 to 15 years
  • Interest Rates: competitive fixed or variable interest rates

4.2. Small business loans(FINPYME Credit): It is designed to provide competitive financing to SMEs in amounts from $100,000 to $600,000, with quick approvals. It finances investments in working capital as well as fixed assets. The IIC currently offers FINPYME Credit in Bolivia, Costa Rica, El Salvador, Guatemala, Haiti, Honduras, Jamaica, Nicaragua, Paraguay, and Uruguay. It supports companies or sole proprietorships with at least three years of business operations, and gross annual sales between $500,000 and $6,000,000.

Terms:

  • Amount: Up to 20% of annual gross sales
  • Currency: United States dollars
  • Term: Minimum three years, maximum seven years
  • Interest Rates: Fixed, determined at the time of approval and held for 90 days.

4.3. Financial Intermediaries

  • Lines of credit to support expansion and development of financing products targeting SMEs.
  • Working capital lines
  • Financial and operating lease lines
  • Trade finance facilities
  • Syndicated A/B loans
  • Agency lines
  • Loan and bond issue guarantees.

4.4. Equity and quasi-equity investments

These instruments are available to finance projects, financial institutions, investment funds as well as small and medium-sized private enterprises that are profitable and with audited financials. Deal size ranges from $2 million to $10 million, with divestment period of 4 to 10 years,that can be accompanied with technical assistance.

Equity (common or preferred shares)

  • 5% to 20% stake
  • Typically no board participation
  • Defined exit strategy

Loans with upside component

  • Revenue or earnings participation
  • Warrants or conversion rights

Subordinated debt

  • Grace periods of 2 years or more

4.5. Partial Credit Guarantees for debt securities

This product is designed to enhance the credit rating of public issues.

Typical terms:

  • Size of issue: $15 million - $100 million
  • Enhancement: 10% to 25% or $2 million to $10 million
  • Term of Issue: 4 to 7 years
  • Currency of Issue: US$ or local currency
  • Currency of Guarantee: US dollar or local currency
How can I get technical assistance from the IIC?

Over the years, the IIC has identified several key areas in which small and medium-size enterprises are regularly in need of assistance. In response, it put together a comprehensive package of value-added services for SMEs under the umbrella brand, FINPYME:

  • FINPYMEDiagnostics: This is a two-phase program. The first phase identifies areas presenting management challenges, and the second one provides individual or group technical assistance.
  • FINPYMETechnical Assistance: Under this program, IIC clients receive consulting services in areas ranging from environmental regulation compliance and financial analysis to technical and market evaluations.
  • FINPYME Family Business: This initiative promotes good governance in family businesses.
  • FINPYME ExportPLus: This technical assistance program seeks to improve the ability of SMEs to access international markets.
  • FINPYME Integrity: This program encourages a more robust and transparent business environment and helps SMEs in the region to effectively incorporate integrity, transparency, and ethics practices into their organizations.
  • GREENPYME: This initiative seeks to boost the competitiveness of SMEs in Latin America and the Caribbean by promoting a more rational use of energy resources through good energy practices and investment in more efficient, environmentally friendly technologies and equipment.

Eligibility criteria: Applicants must be an IIC current or potential client, a small and medium-size enterprise as well as willing to provide a counterpart of the total cost of the consulting service.

The IIC offers technical assistance to IIC potential and current clients through five different categories:

  • Feasibility Studies: The IIC offers technical assistance to SMEs by supporting feasibility studies to assess the technical, financial and commercial viability of a project.
  • Strengthening Client’s Supply Chain: The IIC supports its clients by helping them enhance and professionalize their supply chain.
  • Enhancing Competitiveness:The IIC supports its clients in the quest to obtain international certifications and to improve specific business areas in order to be able to increase their competitiveness (i.e: market identification, marketing strategies, and business plan development to target new markets in the region). The IIC help its clients with the resources and identifying experts in topics such as engineering, strategy and finance to implement the changes.
  • Monitoring IIC Projects: Many of IIC projects are developed in a long span of time and generally require the support of experts in the field to guide the implementation and monitoring of the construction of projects. The IIC and IIC donors support companies with this third-party review and expertise to guarantee that the projects are executed on time with the least amount of budget overruns.
  • Environmental and Social Reviews:The IIC offers technical assistance to IIC potential and current clients to comply with the environmental, social and legal due diligence necessary to loan approval.
What are the basic requirements to get financing or technical assistance from the IIC?

Eligible companies are typically majority-owned by citizens of any of the IDB’s 26 member countries in Latin America and the Caribbean. Eligible financial institutions include, but are not limited to, commercial banks, leasing companies, finance companies, and specialized financial service companies. The IIC is an active investor in private equity funds exclusive focus on Latin American and Caribbean companies.

For more information, please visit the IIC’s Basic Requirements.

How much does IIC financing cost?

The IIC works to provide financing at the lowest possible cost, which varies according to the features of each operation. All operations include:

Interest Rate: Market rates vary, based on a spread on the LIBOR benchmark rate. The IIC also offers fixed rates.

Closing fee: minimum 1% of amount financed, payable at first disbursement.Depending on the operation, IIC fees may include:

Appraisal fee: Depending on the size and complexity of the project, this ranges from US$ 10,000 to US$ 50,000. This is a non-refundable fee needed to evaluate the viability of a proposed operation.

Commitment fee: 0.5% per year of the undisbursed balance, upon approval of the loan.

Supervision fee: Ranges from $ 3,000 to $ 10,000 per year during the life of the loan.

Syndication fee: Minimum 1% of the funds of any third party included in the operation under an A/B or syndicated loan.

Legal costs, prepayment penalties and other charges may also apply.

How do I apply for financing?

In order to apply for IIC financing, you should fill out our Corporate Loan Application form.