SMALL BUSINESS FINANCING

Problem

Many small businesses in Latin America and the Caribbean are unable to grow and develop their full potential. A critical bottleneck is lack of access to financing, which particularly affects small businesses that are too large for microfinance and too small for bank lending - the “missing middle”. Nearly 65% of small businesses in the region have restricted access to loans or lines of credit, representing a financing gap in the range of USD 80 to 90 billion.

Objective:

The MIF aims to expand access to financial services for small businesses.

MIF Solutions:

• Encourage commercial banks to serve small businesses by implementing downscaling models
• Encourage microfinance institutions to serve small businesses by implementing upscaling models.
• Encourage financial institutions to create specific and innovative products for small businesses.

Results and Impact:

• More financial institutions expanding or developing new products for small businesses;
• More small businesses in the region accessing financing;
• More financing being directed to small businesses;
• Through a demonstration effect, other institutions are encouraged to expand services to small business;
• Impact of small business finance in areas such as business performance, growth and employment is measured and evaluated;
• Knowledge products addressing small business financing issues are developed and disseminated.