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Latin America Investment News on Viva Tropical

Almost Free Money: $202 Million Available for Enterprises Involved in Specific Sectors

Article Summary:

With a capital of $ 202 million available for micro, small and medium enterprises, El Salvador begins operations of a state-ran National Development Bank. Funds are available only to certian sectors such as energy, tourism, export industry, foreign investment and projects in education and health.

Photo Credit: El Financeiro

Original Article Text From El Financeiro via Google Translate :

Started national development bank The Salvador

Since January last, officially began operating the National Development Bank of El Salvador (Bandesal), with a capital of $ 202 million, which will be available primarily to micro, small and medium enterprises (MSME).However, later also seek funding to large enterprises, preferably those that require large investments such as construction and agricultural industries, said the technical secretary of the Presidency, Alexander Segovia.

The productive sectors have priority, but you’ll also working capital for strategic bets as energy, tourism export industry, foreign investment and projects in education and health, said Cesar Barahona, commercial director Bandesal.

No means no funding will address the requirements for trade and services sector, Baker said, but made it clear that consumer credit will not be funded by state, capture or deposits, as well as establishing the law.

The Bandesal, unlike its predecessor the Multisectoral Investment Bank (BMI), it will be a first-tier banks in lending productive, but will serve as second-tier commercial banks, which provide special credit lines for to finance for micro and small enterprises.

For his part, President of the Central Reserve Bank (BCR), Carlos Acevedo, said that the new national bank intended to support key productive sectors to boost economic development.

The Technical Secretariat of the Presidency, confirmed that “the development bank will be operational from day one with 40 lines of credit.”Segovia said, by one or two weeks after the start of operations of the new national banking system, employers can begin to submit loan applications to finance investment projects.$ 2,462commercial banks amounted million in consumer loans accumulated to November 2011.$ 417.6million in deposits reported the Mortgage Bank to November 2011.

Oscar Lindo Bandesal president, confirmed that once the integration of a board of governors of the bank to be made in the first two weeks of February, the state bank will be able to approve and disburse loans from early April.

Next Guarantee Funds
The national banks will be complemented with an economic development fund of $ 65 million and the Salvadoran fund guarantees $ 20 million to support any requests for funding made to commercial banks, micro and small enterprises.

The idea of ​​the guarantee scheme is to facilitate the micro and small productive units have private access to bank credit, because to finance constraints imposed including high interest rates.

Through these mechanisms, the development banks may have rates of 6% to 7%, slightly lower that applies commercial banking, said the president of the BCR, Carlos Acevedo.

In total, the new national banking system for productive development started with $ 297 million, of which $ 202 million from the defunct Multilateral Investment Bank and $ 85 million for guarantees were provided by the Ministry of Finance and the BCR.

Victor Ramirez, superintendent of the financial system, explained that this project will have available credit, that by becoming anchor businesses will generate a dynamic, leading the country to higher levels of economic growth.

Since the 2008 financial crisis, private credit for productive purposes (new investments, exports or the like) has remained at low levels, which explains in part the low economic growth, he said.”The problem is that there is big money here, but you are not paying for productive activities or strategic sectors,” said then head of the Secretariat of the Presidency, Alexander Segovia.”Now there are no excuses, all sectors who have ideas to transform them into productive projects and enterprises can do so with the new development bank,” he reiterated Segovia.

It is estimated that Bandesal will be able to provide or credits up to $ 1,200 million, without taking into account the capacity of finance for the Agricultural Development Bank (BFA) and the Mortgage Bank (BH) forming part of the new financial system for the promoting development.

Link to Original Article:

From El Financeiro

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