Regional study highlights challenges for Costa Rican SMEs to access credit

Despite the fact that 6 out of 10 microphones, small and medium-sized enterprises (SMEs) in Costa Rica know the existence of Development banking system (SBD), 33% of them said their request for help was rejected. And the group of companies that obtained funds of the SBD, only 5% received partial approval.

This was revealed by a regional study conducted by the Latin American Center for Innovation and Entrepreneurship (Celiem). The report adds that state-owned banks are the most frequently mentioned in approvals and denied applications. This lack of access to credit could be decisive for the survival of many businesses. After a year of pandemic, this seriously affected their operations and the effects of which are still palpable.

Access to credit

Celiem reported that after an investigation, he found that 87.6% of SMEs saw their activity significantly reduced or completely paralyzed, due to the health crisis caused by the Covid-19 pandemic: “This monitoring allows us to reaffirm the important task that remains to be accomplished. in terms of access to finance for SMEs. Despite the fact that several countries have incorporated different financial products into their support instruments, the structural problems of financial regulation that facilitate the environment to provide the resources that MSMEs need to develop have not been resolved, ”he said. said Celiem’s ​​executive director Luis Álvarez.

This adds to a tangle of procedures that make it difficult for startups to survive in today’s financial ecosystem, National Chamber of SMEs president Carlos Peña said in an interview last month.

Additional complicated factors

In addition, other factors that complicate business management such as lack of information. For example, seed capital (46%), guarantee and guarantee fund (29%) and venture capital (19%) are the main instruments experienced by Costa Rican SMEs, according to the regional study.

“The government’s proposals must consider the establishment of credits for working capital under favorable conditions, the reduction of payment for services, the generation of new financial instruments and the establishment of better conditions. This is happening, to strengthen the link of companies in the value chains of public institutions, highlighting the need for better access to public procurement, ”Celiem said.

In the region, the situation is not at all very different, according to Celiem’s ​​findings. At least 75% of them use their own capital, often taking on personal debts for the operation of the business. This, coupled with a loss of customers and profits in recent months, means that more than half of them foresee a negative outlook for the remainder of the year.

On the other hand, the report finds that, while it is true that there is a marked increase in the use of digital platforms, the overall situation is still far from obeying widespread adoption and appears to be more circumstantial.

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