The Inter-American Development Bank (IDB) and the Multilateral Investment Fund (MIF), will provide up to $55 million to help financial intermediaries in Latin America and the Caribbean implement lending models that support growth in women’s businesses.
The initiative, called women enterpreneurshipBanking, aims to provide incentives to banks and other financial intermediaries to test innovative, inclusive lending models for women-owned small and medium enterprises (SMEs).
The IDB’s Structured and Corporate Finance Department (SCF), as part of its financial markets strategy’s beyondBanking program, will offer up to $50 million in A/B loans, risk-sharing facilities and partial credit guarantees. The MIF, through its Line of Activity for Promoting Small Enterprise Financing, will provide up to $5 million in grants to transfer knowledge of effective lending models for women-owned SMEs and to train loan officers and credit managers in these products and services.
Under traditional lending models, women can be rejected for credit because of informality, lack of credit histories and collateral, not fitting bank’s marketing strategies or client profiles, low education levels, lack of formal work experience and exclusion from entrepreneurial networks. Microfinance has strengthened women’s access to finance, but despite strong repayment records, women entrepreneurs often cannot access larger business loans to grow their businesses beyond the micro level.
The goal of this initiative is to provide an array of incentives to help financial intermediaries fund the costs of finding and implementing strong models and share some of the initial risk. To achieve this, the MIF and SCF will tap their regional experience, as well as their knowledge of relevant models in other regions, to bring the best ideas to interested financial intermediaries.