IFC and Santander collaborate to support SMEs and expand green financing in Brazil

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The FINANCIAL — IFC, a member of the World Bank Group, is partnering with Santander Brasil to boost access to credit for small and medium-sized enterprises (SMEs) and expand green financing in Brazil.

IFC is providing $100 million (BRL560 million equivalent) in financing to Santander Brasil through its Working Capital Solutions Program, a key component of the Corporation’s $8 billion fast-track program to mitigate the impacts of the COVID-19 pandemic. Half of the financing for Santander Brasil will be devoted to the commercialization of photovoltaic panels. Of the remaining amount, at least 20 percent will be directed to SMEs owned by women. IFC’s investment consists in a one-year senior loan, which can be renewed once, for additional 12 months. This is Santander’s third transaction with IFC since 2017.

“Financing green credit lines at this moment is essential to support the transition to a cleaner economy, with focus on small businesses and entrepreneurs. In addition to being part of our strategy, it contributes to a virtuous cycle of resumption of the country’s economic activity. This new partnership with IFC allows us to expand our operations on these important fronts of action,” says Franco Fasoli, director of Companies, Governments & Institutions at Santander Brasil.

Santander Brasil is a pioneer in financing solar power generation projects, from large solar plants to the sale of photovoltaic panels to small farmers. The Bank has already made possible the financing of 285 wind farms, which account for 30 percent of the installed capacity of wind energy in Brazil. Santander Brasil is also one of the leaders in providing financing to SMEs in Brazil and has recorded a 27.3 percent growth in its loan portfolio to the segment in the 12 months through June 2020.

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“The COVID-19 pandemic has been affecting economies worldwide, leaving small and medium-sized enterprises particularly vulnerable. That’s why, in addition to catalyzing green projects, IFC’s loan will allow Santander Brasil to support small and medium-sized companies, including women-owned businesses, enabling them to continue their business and preserve jobs,” says Rogério Santos, IFC’s head of Financial Institutions for Brazil and the Southern Cone.

IFC has invested in Brazil’s private sector since 1957 to address the country’s most critical development challenges, including urbanization, social inclusion, competitiveness and productivity, and management of natural resources. In fiscal year 2020, IFC’s new long-term investments in Brazil, across all sectors, totaled $2.2 billion, including $615 million in third-party resources.

The portion of the financing focused on women-owned SMEs (WSMEs) uses resources provided by the Women Entrepreneurs Opportunity Facility (WEOF), a global finance facility dedicated to expanding access to capital for women entrepreneurs. WEOF was launched in 2014 by IFC, through its Banking on Women program, and Goldman Sachs 10,000 Women. The facility has already reached 73,000 women entrepreneurs through its investments and is on track to reach 100,000 women globally.

Charlotte Keenan, Global Head of Goldman Sachs 10,000 Women, said, “WEOF is committed to building the capacity of local banks to mitigate against the disproportionately adverse impact of COVID-19 on women-led businesses. This innovative partnership allows us to support scale of working capital finance for WSMEs in emerging markets to ensure resources for their continued growth through challenging economic times.”

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