Staff Writer l Palladium - Apr 07 2023
Time is Money: Leveraging Innovative Technology to Finance Women Entrepreneurs

Women entrepreneurs face unique challenges when starting and running their businesses, including social and cultural barriers, lack of education and training, and limited access to markets and networks. In addition to these social barriers, access to finance is a major challenge, as women-owned, -led, and -managed small and medium-sized enterprises (W-SMEs) confront a US$1.7 trillion financing gap globally.

Across the globe, the USAID CATALYZE Women’s Economic Empowerment Activity is working to improve women’s economic opportunities by expanding access to finance for W-SMEs.

In 2022, CATALYZE conducted an in-depth gender assessment with Propemi Banco America Central (BAC) Credomatic in El Salvador to identify opportunities to overcome constraints to lending to W-SMEs. Together, they developed a strategy to serve the women's market and address the top barriers to accessing finance for W-SMEs, including lengthy processes, excessive requirements, and lack of collateral.

“To ease the loan application process for women, CATALYZE and BAC designed a financial credit product with greater accessibility and fewer requirements than those of the bank’s conventional offerings to SMEs,” explains Laura McCarty, CATALYZE Communications Director. She adds that this product enables women to apply for loans from home, which reduces the time spent away from their business or household duties. It also allows for faster access to financing and self-management through digital channels.

BAC is also providing special access to unsecured credit for women who lack collateral. This will help reduce women's reliance on informal lending, which can have high interest rates and abusive loan terms, while still enabling them to access financing required for growth. “BAC is using the product to encourage users to seek out other financial solutions available to SMEs, such as online payroll payments, payment of suppliers and taxes, loans with preferential rates, international transfers, and online banking,” McCarty adds. “Strengthening its relationship with W-SMEs will increase BAC’s profitability while helping W-SMEs to grow.”

Since the product pilot launched in July 2022, BAC has committed more than US$950,000 of new financing to 24 W-SMEs. This success shows that financial institutions that design and roll out enhanced products, processes, and policies can capture a substantial portion of the women's market while helping W-SMEs to grow.

“The loan from BAC Credomatic has had a positive impact on me given its flexibility,” said Edith Marleen Rivas de Herrera, owner of La Gracia Pharmacy. “It enabled me to increase my inventory of medicinal and pharmaceutical products to meet the demand of my clients.”

McCarty thinks that CATALYZE is on the right path to address the barriers women entrepreneurs face. “Through innovative financial technologies and technical assistance, CATALYZE is helping to increase women’s access to capital to drive the success of their business and the economic growth in their communities.”

USAID CATALYZE is implemented by Palladium and funded by the United States Agency for International Development (USAID). Read the full story or contact for more information.