IDB Invest, part of the Inter-American Development Bank (IDB), and the Mexican Business Council, or CMN, announced a program on Sunday to provide up to $12 billion in loans a year to small and medium-sized businesses in an effort to underpin their operations as they cope with the economic turmoil caused by the COVID-19 pandemic.
In a joint statement, the two groups said the will "seek the collaboration and support" of local commercial banks, international investors and other development banks to mobilize resources in an effort to expand reverse factoring lines. According to the statement, these lines of credit offer simple financing at attractive rates of interest.
The CMN is a lobby group that represents some of Mexico's largest business groups. The goal of the program is to assist 30,000 small and medium-sized firms in Mexico. The plan has the backing of Mexico's Finance Ministry, the statement said.
The aim is to offer revolving credit lines with an average term of 90 days, in either Mexican pesos or US dollars. IDB Invest said it wants, through the program, to build $3 billion in reverse factoring lines of credit aimed at dovetailing with existing programs.
"IDB Invest seeks the expansion, acceleration and democratization of access to credit for the SMEs that make up the value chains of large companies. This is part of its strategy to support the economic stability of the region through the private sector, since maintaining liquidity in value chains and trade multiplies the social and economic benefits," the statement said.
According to the statement there are 4.1 million small and medium-sized enterprises in Mexico, contributing to 42% of gross domestic product and account for 78% of employment. "However, only 23% obtain financing from commercial banks," which represents one of the main reasons for their limitations for expansion and survival, the statement said.
Source : https://www.latinfinance.com/daily-briefs/2020/4/27/idb-invest-mexican-business-council-partner-on-12-bln-in-small-business-loans