A new facility that aims to boost businesses’ financial access in Latin America and the Caribbean awaits micro, small and midsize enterprises.
The Inter-American Development Bank has green-lit the creation of a $25 million facility that would provide loans and partial credit guarantees to financial institutions in the region. The facility is for banks eyeing lending to MSMEs that face difficulty meeting traditional bank requirements.
The facility will provide up to eight banks an innovative credit assessment tool: psychometric testing. Instead of looking at assets, financial institutions will assess the viability of MSMEs for credit by focusing on certain attributes of an entrepreneur, such as ethics, integrity, personality and business skills, via the tool.
IDB’s Multilateral Investment Fund will assist banks in the tool’s implementation through technical cooperation. Several financial institutions in Africa and Latin America have already piloted the test.
The facility, part of IDB’s beyondBanking program, is “expected to be available for the next four years,” according to a news release.
Read more development aid news online, and subscribe to The Development Newswire to receive top international development headlines from the world’s leading donors, news sources and opinion leaders — emailed to you FREE every business day.