The Inter-American Development Bank (IDB) has approved a partial credit guarantee for US$ 10 million that is aimed at facilitating access to loans for 80,000 small businesses. The project originated in an innovative operations system implemented by the Banco de Crédito e Inversiones (BCI) in Chile.
To implement the program the BCI will have new credit and administration technologies available, in addition to forming partnerships with corporate customers and companies with broad-based distribution networks and their own micro-business customer bases.
The system, which will be supervised by BCI Nova Banca Emergente, also includes training to expand financial services to business operated by low-income entrepreneurs, who have traditionally been excluded from this type of initiative.
The plan’s development will mainly be centered on the Chilean capital Santiago, which concentrates a quarter of the country’s micro-businesspeople, who provide 40% of the Metropolitan Region’s jobs.
It is currently estimated that around 60% of Chilean micro-businesspeople do not have access to bank credit, which is why the measure implemented by the BCI and the IDB is of vital importance for this sector of the national economy.
“The BCI, with support from the IDB, will extend financial democracy to a market that has received little attention, through the full use of modern technologies and new business tools applied with other strategic partners. This will have a real impact on the lives of small businesses,” says Luiz Ros, BCI manager of Opportunities for the Majority.
The credit guarantee is denominated in Chilean pesos. It also considers a donation of US$ 600,000 by the IDB Multilateral Investment fund, mainly to the program’s training component.
Likewise, to facilitate the implementation of the system, the financial institution will work with company suppliers to obtain credit histories and information with the necessary data to decide the respective loan requests.
The project, programmed for next year, includes other innovative technological tools, including electronic payment and online collection, as well as specialized training for bank personnel and mobile classrooms to extend financial education to loan recipients.