SAN SALVADOR–Through a $25 million credit guarantee agreement signed this morning, the U.S. Agency for International Development (USAID) and Banco Davivienda El Salvador pledged to promote access to credit for small and medium enterprises (SMEs) in order to increase productivity and exports, an important goal of the Partnership for Growth between the governments of El Salvador and the United States.

The agreement announced this morning will last eight years and represents a total investment of $25 million from Banco Davivienda.  The agreement will expand the availability of credit for SMEs and encourage Banco Davivienda to grant loans with broader payment. Market segments like exports and manufacturing will benefit from this initiative.

The credit guarantee agreement was signed by the CEO of Banco Davivienda El Salvador, Gerardo Siman, and USAID/El Salvador’s Mission Director, Kirk Dahlgren. USAID Deputy Administrator for Economic Growth, Education and Environment, Eric Postel, who is visiting the country, witnessed the signing.

"Today, and with the help of USAID, we are the financial institution with the largest credit guarantee program for SMEs in Central America, amounting to $25 million. With this partnership, Davivienda gives a new boost to the SME sector and business customers. This will allow more companies to have access to safe financing, thereby impacting the productivity and enhancing the development of El Salvador," said Siman.

SMEs account for over 70 percent of total employment in El Salvador; therefore, helping SMEs to access financial services, increase their productivity and become more competitive in international markets will boost the country’s economy. The $25 million credit guarantee is part of the Development Credit Authority (DCA), in which USAID and the Department of State have partnered with three private financial institutions (Banpro in Nicaragua, Velifin in Mexico, and Banco Davivienda in El Salvador) to provide $98.5 million dollars in loans for a total of 4,000 SMEs in the three countries.

The credit guarantee is funded by the U.S. government’s "Pathways to Prosperity in the Americas," which unites 16 Western Hemisphere governments to collectively strengthen small businesses, facilitate trade and regional competitiveness, build a modern and inclusive workforce, and encourage sustainable or "green" business practices. USAID works with investors, financial institutions and local development organizations to design and deliver investment alternatives to unblock funding for entrepreneurs in developing countries.

USAID also supports Salvadoran SMEs through other initiatives, such as the online trading platform known as SBDCglobal.com, linking Salvadoran business with more than 2,000 Small Business Development Centers in Latin America.  The Step by Step Export Program, supported by USAID, has provided assistance to 80 SMEs to access markets in the region. The U.S. Government has assisted more than 3,400 companies, which generated approximately $26 million in new sales and exports and more than 2,500 jobs since Partnership for Growth started.

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