IIC and China Allocate US$5 Million to Directly Finance SMEs

04/15/2013

IIC launches subordinated debt lending under its FINPYME Credit program

Washington, D.C., April 15, 2013 — The Inter-American Investment Corporation (IIC) is expanding FINPYME Credit, its flagship program of financing for small and medium-sized enterprises (SMEs), with the lauch of a new subordinated debt product for up to US$5 million. This expansion will be cofinanced in equal parts by the IIC and the China-IIC SME Equity Investment Trust Fund.

The new product addresses the demand for lending by SMEs that lack the requisite collateral for traditional loans. These smaller-scale investments will be made directly through a simple and standardized quasi-equity investment instrument. The product will be offered to firmly established and growing SMEs with solid business plans and good indicators. These subordinated loans will have terms of up to seven years.

“In keeping with our development mandate, with this new product the IIC is supporting SMEs in Latin America and the Caribbean who have not had access to loans in the past because they lacked the collateral requirement,” noted John Beckham, chief of the IIC’s Operations Division. “There are valuable small business segments in the market that are accomplished in their fields. We can now help them grow and fulfill their role as drivers of the economy.”

FINPYME Credit is a small-loans program that provides competitive financing to SMEs in Latin America and the Caribbean. These loans range from US$100,000 to US$600,000 and are available to businesses in a variety of productive sectors. Since FINPYME Credit was established in 2006, it has supported some 70 business with more than US$18 million.

The China-IIC SME Equity Investment Trust Fund has a US$150 million endowment consisting of equal contributions by the People’s Republic of China and the IIC. Its purpose is to make direct equity and quasi-equity investments, as well as investments in hybrid instruments such as subordinated debt, with a view to benefiting SMEs of the IIC’s member countries in Latin America and the Caribbean.

About the IIC

The IIC, a member of the Inter-American Development Bank (IDB) Group, promotes private-sector development in Latin America and the Caribbean with a focus on small and medium-sized enterprises. We help companies streamline management processes and provide them with financing in the form of equity investments, loans, and guarantees. In 2012, the IIC approved 73 operations totaling US$378.9 million. Throughout our history, we have approved nearly 800 direct loans to SMEs and financial intermediaries, for a total of US$4.8 billion. An additional US$2.8 billion has been mobilized through cofinancing and syndication agreements. For more information on the IIC’s activities, visit www.iic.org.
 

Contact: John Beckham

Telephone: +1 (202) 623-3984

Email: johnbec@iadb.org