IFC funds small business leases in Mexico

IFC funds small business leases in Mexico

Loans Debt Coronavirus Mexico US

The International Finance Corporation (IFC) said it arranged $117 million in long-term financing for the local branch of Spanish bank BBVA to provide vehicle and machinery leases to small businesses in Mexico.

The financing involves $58 million from IFC itself along with $43.5 million from a co-lending program with institutional investors and $15 million from a clean energy financing plan with the Canadian government, IFC said in a press release om Thursday.

BBVA will use up to $40 million from the financing to fund leases for "climate smart" equipment, IFC added.

Small and medium-sized enterprises (SMEs) account for 99% of businesses and employ around 71% of the workforce in Mexico. They also represent 52% of GDP, according to IFC.

"At the exit of this crisis, most SMEs will need to grow again, and climate investments will take on a whole new dimension with help from the Mexican financial sector," Ary Naïm, IFC country manager in Mexico, said in the press release, referring to the economic impact of the coronavirus pandemic.

According to the SME Finance Forum, the finance gap for small businesses in Mexico stands around $164 billion, or 14% of GDP, and approximately 31% of SMEs cite a lack of access to funding as a major obstacle to growth.