Guatemala City, May 22, 2023 – The U.S. International Development Finance Corporation (DFC) in collaboration with the U.S. Agency for International Development (USAID) has issued a $12.5 million partial credit guarantee to Banco de América Central (BAC) for the purpose of expanding its small and medium-sized enterprise (SME) loan portfolio by $25million, with an emphasis on rural areas. The U.S. Government recognizes the role of the private sector as an engine of economic growth and therefore of national development to generate new jobs through investment.
Through its development agencies such as USAID and DFC, the U.S. Government expects to contribute to the growth of economic activity of both SMEs and the communities where they operate by creating new investment and employment opportunities, generating prosperity and well-being for Guatemalan families. This risk-sharing facility with BAC is projected to support approximately 250 SMEs to expand their businesses and the creation of at least 500 new jobs. Over the last 5 years, DFC has supported several financial institutions in Guatemala to expand lending to small and medium-size enterprises.
Access to financing is one of the main constraints faced by small and medium-size companies. This is especially true for those located in the Western Highlands of Guatemala, due to, among other factors, incomplete financial data, inadequate accounting statements, and insufficient collateral. The DFC partial credit guarantee functions as a collateral substitute reducing the risk default for financial institutions thereby facilitating access to financing for SMEs.
Banco de América Central is part of a regional financial group with more than 70 years of experience in the banking sector that has incorporated as part of its core strategy, serving small and medium-size companies in a comprehensive manner with innovative products and services. DFC is expanding BAC’s capacity to lend to SMEs.
To date, BAC has granted 83 loans to SMEs, of which 55 were to new clients. Total financing with the U.S. Government guarantee amounts to more than $30 million. With this new operation, BAC expects to reach approximately 250 SMEs throughout the country through new lending of $25 million.