IDB Invest, a member of the IDB Group, has provided the Genesis Business Foundation (FGE, for its acronym in Spanish) a loan in quetzals equivalent to $20 million to support increased access to financing for the country's micro, small and medium-sized enterprises (MSME) in Guatemala.
The financing will provide the necessary resources in the mid-term to facilitate the sustainable growth of FGE's microfinance portfolio and will focus on loans to MSME. Additionally, the expansion of the microfinance portfolio will be promoted through financial and technological inclusion, which will allow MSME greater reach and economic accessibility, mainly in rural Guatemala.
The deal has a five-year tenor and a one-year grace period. It consists of senior unsecured financing, comprising a committed tranche of $12 million and an uncommitted tranche of $8 million.
The technological inclusion of the microfinance sector in Guatemala will help to positively impact commercial access, with greater transactional agility, at a lower cost and reaching more people. It will also accelerate the economic and social growth of a large number of Guatemalan families.
The microfinance sector in Guatemala strengthens the economy of the most vulnerable who are at the base of the pyramid. Thanks to medium and long-term financing, loans are provided to finance expansion projects that increase productivity, mainly in rural areas. It is in this area where the majority of agricultural production and the indigenous population are concentrated, with limited access to financing.
IDB Invest promotes development and inclusion in the region through the financing of projects such as the Genesis Business Foundation, which boost the economy and responds to impact generated by the COVID-19 pandemic.
This deal potentially contributes to four United Nations Sustainable Development Goals (SDGs): No Poverty (SDG 1), Decent Work and Economic Growth (SDG 8), Sustainable Cities and Communities (SDG 11), and Responsible Consumption and Production (SDG 12).
IDB Invest's support to FGE will be complemented with advisory to help create a long-term sustainable financing strategy, which includes a framework to issue thematic bonds, and design an environmental and social risk management system. In addition, it will help to acquire technology, which will help identify and monitor climate risk in FGE's agricultural value chain financing portfolio.
About IDB Invest
IDB Invest, a member of the IDB Group, is a multilateral development bank committed to promoting the economic development of its member countries in Latin America and the Caribbean through the private sector. IDB Invest finances sustainable companies and projects to achieve financial results and maximize economic, social and environmental development in the region. With a portfolio of $12.1 billion in asset management and 333 clients in 24 countries, IDB Invest provides innovative financial solutions and advisory services that meet the needs of its clients in a variety of industries.
About Genesis Business Foundation
Genesis Business Foundation is a Guatemalan non-profit development entity, leader in the microfinance market, with 32 years of work, promoting local economic activation. Its comprehensive management model accompanies business growth, with financing and training. It has national coverage in 22 departments, 105 branches, 844 development promoters, and 88 development facilitators who are trained in the local language on topics related to financial education, credit management, administrative and financial skills, management skills, personal development and quality of life. FGE's activity is a model of sustained and ideally continuous development, oriented towards the client development path. It promotes financial inclusion with high digital innovation, and it is at the forefront of the microfinance service in the country with extensive technological development, enabling agility and efficiency in its processes and service. In 32 years, its solid social and financial practices have impacted more than 5.7 million Guatemalans, cumulatively disbursing Q12.966 billion that boost the economy and contribute to the reduction of poverty in the country.