IFC Unveils First Loss Guarantee Facility to Strengthen MSME Financing Support.

Banking & Finance

In April 2025, the International Finance Corporation (IFC), a member of the World Bank Group (WBG) based in the United States, launched a call for expressions of interest for eligible Financial Services Providers (FSPs) to participate in its Catalytic First Loss Guarantee Facility under the Micro, Small, and Medium Enterprise (MSME) Finance Platform.


      - The facility is designed to enhance credit access for women-owned businesses, agriculture-based MSMEs, and climate-focused financing, while also demonstrating the commercial potential of these sectors.

      - The primary aim of the facility is to offer first-loss guarantees to qualified third-party FSPs. This will empower them to expand operations, explore innovative products, and adopt inclusive risk criteria.

     

Main Point :-   (i) MSMEs represent over 90% of all businesses worldwide, contribute 50% to global GDP, and account for 70% of employment. However, the MSME finance gap stands at USD 5.7 trillion, expanding to USD 8 trillion when informal enterprises are included.

      (ii) The facility targets Regulated Banks, Non-Banking Financial Institutions (NBFIs), and Microfinance Institutions (MFIs) authorized to conduct lending or leasing operations in their respective regions.

(iii) This initiative is aimed at fostering growth in the MSME sector by addressing financing challenges, with a specific focus on women and climate-conscious enterprises.

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