IDB supports small business loans in Honduras

IDB supports small business loans in Honduras

Coronavirus Loans Debt Honduras Central America US

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The Inter-American Development Bank (IDB) said Friday that it approved a $20 mln loan to support micro, small and medium-sized enterprises (MSMEs) in Honduras.

The money will go to a program from Bahnprovi, the state-owned bank for housing and industry, that will provide advanced payments and rediscounting lines and supply guarantees for mid-sized lenders to offer working capital loans to MSMEs, the IDB said in a press release.

Bahnprovi's program is expected to benefit roughly 1,000 businesses in the tourism sector, the IDB added.

The loan involves a 40-year bullet loan for $13 million at a fixed rate of 0.25% per year and a 25-year tranche for $6.99 million with an interest rate based on Libor, according to documents from the IDB.

MSMEs account for more than 70% of all jobs in Honduras, but they face a funding gap of roughly $2.9 billion. The tourism industry provides 11.7% of GDP and 12.2% of jobs in the country, according to the IDB.