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Financial Services for Small and Medium Enterprises

To help financial institutions expand lending markets, the Financial Services for Small and Medium Enterprises project in El Salvador provided a variety of financial services to underserved markets and small and medium enterprises.

As of 2005, micro-, small, and medium enterprises accounted for 99.6 percent of El Salvador’s businesses, employing 65 percent of the population. Small and medium enterprises (SMEs), in particular, were recognized as drivers of economic growth. The Financial Services for Small and Medium Enterprises project was developed under USAID to assist financial institutions in efficiently and profitably serving these businesses, providing the nearly 16,000 SMEs operating in El Salvador with the financial services needed to grow, generate employment, and increase sales and income. 


Chemonics worked to enable six major commercial banks, two non-bank financial institutions, and two credit unions to expand lending and other financial services to underserved markets and to introduce viable loan products that better serve SMEs’ financing needs. The project helped bank partners move away from cumbersome, manual systems to more streamlined evaluation tools, significantly reducing the time and paperwork to secure SME loans and better serving their clients.

The project helped partner banks build sustainable platforms to serve SMEs, integrating all aspects of the banks’ business — from strategy to risk management to sales and marketing of small and medium enterprises products. Chemonics work with branch staff — from the president to the loan officer — to build capacity for successful approaches to attracting, serving, and retaining SME clients. In addition, all bank partners developed and implemented specialized SME credit risk evaluation models and systems. The majority of partners developed tailored product portfolios to serve SMEs’ credit and non-credit financial services needs. Overall loans to SMEs rose 56 percent, the number of borrowers by 46 percent.
Project Results: 
  • Increased the number of SME borrowers by 5,283, or 46%
  • Increased the number of loans to SMEs by 9,380, or 56%
  • Introduced 36 new or improved SME products
  • Increased volume of loans to SMEs by $183.6 million,
    or 25%

Project Duration: 2006 − 2009.


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