FONPLATA will grant USD 39 million to support micro and small enterprises in Uruguay
To continue supporting the economic recovery process following the COVID-19 pandemic, FONPLATA – Development Bank signed a new loan agreement with Uruguay to support micro, small, and medium enterprises, one of the sectors that suffered most the effects of the crisis caused by the coronavirus. The USD 39 million loan agreement will be disbursed in two stages. The first, in the short term, will be of USD 15 million, and the remaining USD 24 million will be available for this same purpose.
In view of the current state of health emergency, the Uruguayan government announced a new set of economic measures that sustain some of the ones implemented in 2020 and incorporating new initiatives. Once again, FONPLATA will support the government to fund actions aimed at strengthening the economy in the face of this situation and continuing with the support line for the MSMEs sector.
This new operation is in addition to the USD 15 million allocated in April 2020 by FONPLATA to grant loans to this business sector through the “Financial assistance program for micro and small enterprises to alleviate the impact of the emergency”, which helped nearly 15,000 companies.
In Uruguay, MSMEs represent about 99% of the business sector and generate around 67% of the jobs in the private sector, i.e., some 630,000 jobs. About 230,000 companies are MSMEs and contribute almost 40% of the GDP.
In this context, the purpose of the funding is to provide financial assistance to the most vulnerable companies and those most affected by the pandemic through a program implemented by the National Development Agency (ANDE). To provide accessibility in the granting of loans on favorable terms and direct monetary assistance will help maintain the companies’ financial liquidity and avoid breaking the sector's chain of payments. On the other hand, the assistance would also enable the purchase of raw materials and supplies, specific investments, and the incorporation of technology to adjust to the current situation.
In addition, and to support ANDE in the implementation of these new instruments, FONPLATA granted non-reimbursable technical cooperation in the amount of USD 70,000 to technically strengthen the agency's Access to Finance Area and Credit Management System.
The funding will contribute to the fulfillment of the 2030 Sustainable Development Goals, especially "Decent Work and Economic Growth" (SDG-8), to promote inclusive and sustainable development and employment for all and policies aimed at supporting productive activities, entrepreneurship, creativity, and innovation, as well as fostering the formalization and growth of micro, small, and medium enterprises.
With this injection of liquidity, the probability of business interruption is expected to decrease in the short run, contributing to the sustainability of the payment chain and mitigating the impacts of the stagnation caused by the health emergency, thus minimizing job losses in the micro and small enterprises sector, most vulnerable to this health emergency.