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

Banking & Finance | Dated: 16 Apr 2025

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.

🎯 Key Highlights:

  • - 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.

💡 Other Important Facts:

  • (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.

📚 Test Your Knowledge:

Recently, which global organization launched the Catalytic First Loss Guarantee Facility to support MSME financing?

Correct Answer: IFC

🚀 Quick Recap: