Show Me the Money
USAID CATALYZE Partners with El Salvador Bank to Leverage Innovative Financial Technology to Finance Women Entrepreneurs, Easing Application Process and Increasing Access to Capital
Time is money. Nobody knows this better than entrepreneurs, particularly women who own their own business and continue shouldering the majority of household work and family care. Yet, time is one of the main factors that stands in the way of women-owned businesses from accessing the capital they need to grow their business.
USAID CATALYZE Women’s Economic Empowerment (WEE) Activity works to improve women’s economic opportunities by expanding access to finance for women-owned small and medium-sized enterprises (W-SMEs). In 2022, CATALYZE WEE conducted an in-depth gender assessment with Propemi Banco America Central (BAC) Credomatic in El Salvador to identify opportunities to overcome constraints to lending to women-owned small- and medium-sized enterprises (W-SMEs). With CATALYZE support, BAC measured the financial institution’s reach amongst women against peer institutions and identified opportunities to capture greater market share. Together, CATALYZE and BAC created an actionable strategy to serve the women’s market and address many of the topmost barriers to accessing finance for W-SMEs, including lengthy processes to access loans, excessive business information requirements, and a lack of collateral.
To ease the loan application process for women, CATALYZE and BAC designed a financial credit product with greater accessibility and fewer requirements than those of the bank’s conventional offerings to SMEs. In July 2022, BAC launched a new loan product specifically designed to increase W-SMEs’ access to finance.
This digital component makes it possible for women to do most of the loan application from home, without having to leave their business or household duties. The new product enables W-SMEs to obtain financial disbursements in less than 24 hours after verification of documents and contract signing, increasing timely access to financing. Once financing has been disbursed, self-management and communication through digital channels minimize time spent on administrative procedures and can increase efficiency and control of operations with automated reporting.
BAC decided to provide special access to unsecured credit for women who lack collateral due to its design. Flexibility in amounts and frequency will allow for financial planning aligned with the cash flow of the business. Facilitating access to finance will reduce women’s reliance on informal lending, which can have high interest rates and abusive loan terms, while still enabling them to access the financing required for growth. BAC is using the product to encourage users to seek out other financial solutions available to SMEs, such as online payroll payments, payment of suppliers and taxes, loans with preferential rates, international transfers, and online banking. Strengthening its relationship with W-SMEs will increase BAC’s profitability while helping W-SMEs to grow.
Since the product pilot launched in July 2022, BAC has committed more than $950,000 of new financing to 24 W-SMEs. Financial institutions like BAC that successfully design and roll out enhanced products, processes, and policies can capture a substantial portion of the women’s market, thereby increasing their market share.
“The loan from BAC Credomatic has had a positive impact on me given its flexibility,” said Edith Marleen Rivas de Herrera, owner of La Gracia Pharmacy. “It enabled me to increase my inventory of medicinal and pharmaceutical products to meet the demand of my clients.”
Through innovative financial technologies and technical assistance, USAID CATALYZE is helping to increase women’s access to capital to drive the success of their business and the economic growth in their communities.
