IIC Increases Its Loan To Eurocapital In Chile

06/16/2008

Expanding the loan from US$3 million to US$5 million will enable Eurocapital to continue growing and to step up its factoring operations with SMEs

Washington, DC - On June 17, 2008, the Inter-American Investment Corporation (IIC) approved expanding its loan to Eurocapital S.A. from US$3 million to US$5 million. This operation, the IIC’s second with Eurocapital, will enable Eurocapital to develop its factoring business.

The loan proceeds will be used to provide financing to small and medium-size companies in Chile in need of working capital, by factoring dollar-denominated or -indexed instruments arising mainly from exports. Factoring is used chiefly by small and medium-size companies that usually do not have easy access to bank financing.

Factoring is an effective tool for the IIC to channel credit to SMEs. Such is the case with Eurocapital S.A., which helps SMEs obtain the resources they need to increase their discounting of export sales documents. The IIC is thus able to serve a larger number of Chilean companies operating in the trade sector.

In Chile there are at present some 100,000 SMEs, of which barely 6,000 have access to formal factoring arrangements. Eurocapital S.A. used the proceeds from the first IIC loan to fund thirty operations with twelve SMEs. The financing provided support for SMEs in Chile’s principal economic sectors involved in foreign trade. The number of SMEs benefiting from this new operation is expected be similar to the number that received financing from the first loan.

The Inter-American Investment Corporation is a multilateral financial institution that is a member of the Inter-American Development Bank (IDB) Group. It provides financing (in the form of equity investments, loans, guarantees, and other instruments) and advisory services to private enterprises in Latin America and the Caribbean. In 2007, the IIC reached US$1.2 billion in assets and approved 62 transactions channeling US$470 million to SMEs in the region. The IIC’s mission is to promote the economic development of its regional member countries by encouraging the establishment, expansion, and modernization of private enterprises, particularly those that are small and medium in size. For more information on the IIC’s activities, please visit www.iic.int.



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