World Bank Approves $100 Million to Boost MSME Financing and Job Creation in El Salvador

The project is expected to support around 5,000 MSMEs, particularly in high job-creation sectors such as tourism, by improving access to longer-term and more affordable financing.

El Salvador is set to strengthen its small business sector and accelerate job creation following the World Bank’s approval of a $100 million financing package aimed at expanding credit access for micro, small, and medium enterprises (MSMEs).

The initiative—Enhanced Financial Intermediation for Jobs Project—targets one of the country’s most critical economic challenges: limited access to finance for small businesses, which form the backbone of employment and growth.

Unlocking Finance for 5,000 Small Businesses

The project is expected to support around 5,000 MSMEs, particularly in high job-creation sectors such as tourism, by improving access to longer-term and more affordable financing.

Key outcomes include:

• Creation of 8,300 new or improved jobs

• Nearly 30% of jobs benefiting women

• Expanded access to formal financial services for underserved businesses

“MSMEs are an engine of employment and growth,” said Finance Minister Jerson Posada. “Expanding their access to credit is essential for enabling them to grow, formalize, and create quality jobs.”

Strengthening Financial Intermediation

The project will be implemented by the Development Bank of El Salvador (BANDESAL) and introduces a multi-pronged approach to improving financial access:

• Line of credit facility: Providing funding to financial institutions to extend longer-term loans to MSMEs

• Partial credit guarantees: Reducing lending risks and encouraging banks to serve smaller businesses

• Support for value chain integration: Helping MSMEs connect to global markets and improve productivity

These measures aim to address structural barriers that often prevent small businesses from accessing traditional financing, including lack of collateral and perceived high risk.

Leveraging Private Sector Investment

A key feature of the programme is its focus on mobilising private capital, building on ongoing efforts by the International Finance Corporation (IFC), the World Bank Group’s private sector arm.

By reducing risk and improving financial infrastructure, the project is expected to:

• Encourage commercial banks and investors to expand lending

• Increase private sector participation in MSME financing

• Strengthen the overall financial ecosystem

“This is about creating an integrated approach to credit access,” said Carine Clert, World Bank Country Manager. “We are working with both public and private sectors to generate more and better jobs.”

Driving Inclusive and Sustainable Growth

MSMEs play a central role in El Salvador’s economy, accounting for a significant share of employment but often facing constraints in scaling operations.

The project aims to:

• Promote inclusive growth by supporting smaller enterprises

• Enhance economic resilience through diversified business activity

• Improve gender inclusion in the labour market

By targeting sectors with strong employment potential, the initiative is expected to deliver both economic and social benefits.

Five-Year Implementation Plan

The $100 million loan—provided by the International Bank for Reconstruction and Development (IBRD)—will be implemented over a five-year period, with sovereign backing from the Government of El Salvador.

The long-term structure allows for sustained support to businesses as they expand operations and integrate into broader economic networks.

The World Bank’s latest investment underscores the importance of MSMEs in driving economic recovery and job creation in El Salvador. By improving access to finance and fostering stronger links between public and private sectors, the project aims to unlock the full potential of small businesses—creating jobs, boosting productivity, and laying the foundation for more inclusive and sustainable growth.