Micro, small and medium enterprises (MSMEs) account for most jobs in Honduras and are essential to the economic stability, but often struggle to access credit to support working capital needs, hire workers, and grow their operations. These challenges, which can contribute to migration, were exacerbated during the COVID-19 pandemic, when lending was further constrained and lockdowns disrupted business.
Solution and Impact
DFC financing to the Central American Bank for Economic Integration (CABEI) — a regional multilateral development bank — is supporting on-lending to MSMEs in Honduras, Guatemala, and El Salvador to help them recover from the economic disruptions of the pandemic by providing them with working capital, capital financing, and startup loans.
Many of the businesses that have benefited from CABEI’s lending are women-owned businesses that were particularly vulnerable to credit constraints. Jeanette de Moncada, who started a small clothing manufacturing business, Confecciones Moncada, 22 years ago, said a loan from CABEI enabled her business to continue operating, and recruit new workers when business slowed. Another woman-owned business, Doris Beauty Salon, used the CABEI financing to rebuild after the pandemic reduced demand.
“My business was at its best and we were growing rapidly, but with the pandemic everything went downhill,” said owner Doris Leticia Varegas. “It’s amazing how we’ve been able to get back on our feet.”
CABEI said the loans it has provided with the support of DFC and other lenders have enabled it to protect almost 10,000 jobs since the pandemic began.