In a move to strengthen the micro, small, and medium-sized enterprise (MSME) sector, El Salvador’s Legislative Assembly approved two key recommendations from its finance and budget committee, paving the way for loan agreements worth $190 million to support MSMEs.
The funding will come from two loans negotiated between the Development Bank of El Salvador (Bandesal) and the Inter-American Development Bank (IDB). According to Marlon Hernández, Director General of Investment and Public Credit at the Ministry of Finance, “This is an economic boost not only through infrastructure investment but also by supporting financial institutions in granting loans directly to MSMEs.”
The first loan, valued at $60 million, will fund a program focused on energy efficiency and renewable energy for small businesses. The initiative aims to promote energy savings and reduce greenhouse gas emissions through financing for high-efficiency boilers, electric motors and pumps, thermal solar systems, and photovoltaic energy systems.
“The goal is to support energy sustainability,” Hernández explained. “This funding is for MSMEs that want to invest not only in necessary machinery but also in efforts to protect the environment.”
The remaining $130 million will go toward a program that supports technological and digital transformation in the sector. The funds will help businesses acquire new equipment, software, and machinery, maintain existing assets, and train staff in digital technologies.
The process began on February 12, when the Assembly authorized sovereign guarantees for the loans. In April, Bandesal and the IDB signed the contracts, and lawmakers have now recommended full ratification by the plenary.