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Micro, Small, and Medium Enterprises (MSMEs) in El Salvador will have access to more credit, more competitive financing, and greater opportunities to boost their businesses, after the Legislative Assembly approved, with 57 votes, granting the State’s sovereign guarantee to the Banco de Desarrollo de la República de El Salvador (BANDESAL) to secure a US$100 million loan from the Banco Internacional de Reconstrucción y Fomento (BIRF).
The initiative aims to strengthen access to financing for one of the sectors that most energizes the national economy and generates employment. With these resources, BANDESAL will be able to increase the funds allocated to intermediary financial institutions, allowing banks, cooperatives, and savings and loan associations to grant more loans to MSMEs.
The financing will be used to implement the project called “Improved Financial Intermediation for Job Creation”, whose main objective is to promote the growth of salvadoran companies, improve their productivity, and facilitate new expansion opportunities.
One of the main benefits of the project is that small and medium-sized enterprises (SMEs) will have greater access to credit, including those that have historically faced difficulties meeting the traditional requirements of financial institutions.
The program includes two key components. The first is a Multidestinos Credit Line, through which BANDESAL will channel resources to financial institutions that will subsequently provide financing to SMEs for working capital, investment, expansion of operations, and other business needs.
The second component is the Fondo de Garantía Parcial de Crédito, a mechanism that will reduce financial risks and lower traditional collateral requirements. This will allow more businesses to access loans under more inclusive and competitive conditions.
Furthermore, the fund seeks to incentivize private capital participation and expand financing opportunities for startups and growing businesses, especially those requiring support to consolidate their market position.
Authorities believe this project will directly contribute to job creation, as MSMEs represent one of the country’s main economic drivers. With greater access to financial resources, companies will be able to invest, expand operations, hire staff, and strengthen their productive capacity.
The loan granted by the World Bank will have a term of up to 18 years and six months, including a five-year grace period during which no principal payments will be made. Subsequently, the debt will be repaid through consecutive semi-annual installments until the total amount is paid.
The financing also includes an initial commission of 0.25% on the total loan amount, which will be covered by the funds obtained, as well as an annual commitment fee of 0.25% applied to the outstanding funds.
With this measure, the Government seeks to strengthen the financial ecosystem for MSMEs and provide tools to boost economic growth, investment, and job creation in El Salvador.
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