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BANFONDESA Secures Financing to Expand Credit for Women Entrepreneurs
Banco de Ahorro y Crédito FONDESA (BANFONDESA) will receive a new financing package from Proparco in Dominican pesos to expand lending in the Dominican Republic, with a particular focus on women entrepreneurs and underserved communities.
BANFONDESA will expand its lending capacity through a new financing package from Proparco that combines a senior loan equivalent to $15 million with an EURIZ portfolio guarantee of up to €5 million, with the funds denominated in Dominican pesos. The operation is expected to support financing for nearly 12,000 women-led microenterprises and help maintain 764 jobs.
The financing targets one of the main challenges facing small businesses in the Dominican Republic: access to formal credit for entrepreneurs who operate outside the country’s traditional banking channels. BANFONDESA specializes in microfinance and serves a large share of its borrowers in rural and suburban areas, where limited access to financial services can constrain business growth and employment.
Focus on Women-Owned Microenterprises
The new operation places women entrepreneurs at the center of BANFONDESA’s planned portfolio expansion. By increasing the availability of credit for women-led microbusinesses, the financing is expected to support businesses that often rely on smaller-scale loans to invest in operations, create employment and strengthen household incomes.
About 71% of BANFONDESA’s borrowers are located in rural and suburban areas, according to the information provided for the operation. That geographic reach gives the financing a broader role beyond individual businesses, particularly in communities where microenterprises form an important part of local economic activity.
The expected impact includes support for approximately 12,000 microenterprises led by women, while 764 jobs are expected to be maintained. The figures underline the emphasis on financial inclusion as well as credit growth.
A Long-Term Partnership With Proparco
The transaction builds on a relationship between the French development finance group AFD Group, FONDESA and BANFONDESA that dates back to 2013. During that period, AFD Group provided three credit lines totaling €12 million to support student lending and financing for microentrepreneurs, including funding transferred to BANFONDESA after the creation of its banking subsidiary.
Proparco, the private-sector financing arm of AFD Group, also provided BANFONDESA with a €5 million EURIZ portfolio guarantee in 2020. That facility was designed to help the institution continue financing entrepreneurs affected by the economic disruption caused by the COVID-19 crisis. Proparco’s existing documentation confirms BANFONDESA’s role as a major Dominican microfinance institution serving microentrepreneurs and lower-income families.
The latest transaction represents the sixth operation involving the AFD Group and FONDESA or BANFONDESA, reinforcing a financial relationship that has developed around access to credit for underserved segments of the Dominican economy.
Rural Reach Expands the Financing Impact
BANFONDESA’s concentration outside the country’s main urban centers is significant for the Dominican economy. Rural and suburban entrepreneurs often depend on microfinance institutions for working capital and business investment, particularly when they have limited access to conventional bank financing.
The institution’s lending activity therefore connects financial inclusion with local economic development. Expanding credit to microenterprises can provide businesses with additional resources while supporting employment and economic activity in communities beyond the country’s largest commercial centers.
Proparco has previously described BANFONDESA as a leading institution in agricultural microenterprise financing and identified microentrepreneurs and low-income families as a core part of its customer base. Its earlier EURIZ operation also used risk-sharing to facilitate lending to Dominican micro, small and medium-sized enterprises.
With the new financing focused particularly on women entrepreneurs, the partnership is extending that financial-inclusion model while increasing the scale of credit available to small businesses across the Dominican Republic.
