International Finance Corporation2015-04-082015-04-082014-07https://hdl.handle.net/10986/21715Very small enterprises (VSEs) in Latin America and the Caribbean (LAC) represent a broad and heterogeneous segment, often underserved by formal financial institutions. They are generally informal and often family businesses. The financial needs of these enterprises are typically overlooked by “downscaling” banks, which find larger and often more formal small and medium enterprises (SMEs) to be a more natural market for their products and services. Microfinance Institutions (MFIs) are starting to move upmarket to serve SMEs, and in particular, VSEs within this segment. However, they use varying definitions, methodologies and products to do so and to date there has been little research or documentation of their experiences. This report highlights the results of a recent study of the existing practices in Latin America of MFIs serving VSEs, where VSEs are considered to be those businesses with financing needs of between US$7,000 and US$30,000. It is a starting point for an institution considering entering the segment, or for one that finds itself having grown into the segment “organically” but with a view to strengthen its position. It includes several checklists for MFIs interested in expanding upmarket into the VSE space, as well as more detailed discussions and examples of the most relevant points.en-USCC BY-NC-ND 3.0 IGOACCESS TO BANKACCESS TO BANK LOANSACCESS TO CREDITACCESS TO CREDIT BUREAUACCESS TO DEBT FINANCINGACCESS TO FINANCEACCESS TO FINANCIAL SERVICESACCESS TO FINANCINGACCESS TO LOANSACCESS TO SERVICESACCOUNTABILITYACQUISITION COSTSAFFILIATESALTERNATIVE FUNDINGASSET BASEASSET DIVERSIFICATIONATM NETWORKAUTONOMYBANK ALTERNATIVESBANK COMPETITIONBANK GUARANTEESBANKING MARKETBANKING SYSTEMSBANKSBORROWINGBRANCHBRANCHESBUSINESS ACTIVITIESBUSINESS CREDITBUSINESS LOANBUSINESS SEGMENTBUSINESS STRATEGYBUSINESS UNITCAPITAL ALLOCATIONSCAPITAL LOANSCASH FLOWCASH FLOW ANALYSISCASH FLOWSCDSCHAMBERS OF COMMERCECHECKSCOLLATERALCOLLATERAL REQUIREMENTSCOMPANYCOMPETITIVE MARKETSCORPORATIONCREDIT ACCESSCREDIT ANALYSISCREDIT BANKSCREDIT BUREAUCREDIT BUREAUSCREDIT CARDSCREDIT GAPCREDIT HISTORYCREDIT LINESCREDIT NEEDSCREDIT POLICIESCREDIT PRODUCTCREDIT PRODUCTSCREDIT RISKCREDIT RISK MANAGEMENTCREDIT SCORINGCSCURRENT ACCOUNTSCUSTOMER PROFITABILITYCUSTOMER SATISFACTIONCUSTOMER SERVICEDEBIT CARDSDEBTDEPOSITDEPOSIT ACCOUNTSDEPOSIT PRODUCTDEPOSIT SERVICESDEPOSIT TAKING INSTITUTIONSDEPOSITSDEVELOPING COUNTRIESDISBURSEMENTDISBURSEMENTSDIVERSIFICATIONDIVERSIFIED PORTFOLIOECONOMIC GROWTHEMERGING MARKETSEMPLOYERSEMPLOYMENTENTREPRENEURSHIPEQUIPMENTEXISTING BUSINESSEXPANSIONFACTORINGFAMILIESFAMILY BUSINESSESFINANCIAL COSTSFINANCIAL CRISISFINANCIAL INFORMATIONFINANCIAL INSTITUTIONFINANCIAL MARKETSFINANCIAL NEEDSFINANCIAL PRODUCTFINANCIAL PRODUCTSFINANCIAL SERVICESFINANCIAL STATEMENTSFINANCIAL SYSTEMFINANCING COSTSFINANCING NEEDSFIRM SIZEFIRMSFIXED ASSETFIXED INVESTMENTFORMAL FINANCIAL INSTITUTIONSFORMAL FINANCIAL SECTORFORMAL INDEBTEDNESSFUNDING SOURCESGOOD CREDITGROUP LENDINGGUARANTEE FUNDSGUARANTEE REQUIREMENTSHUMAN RESOURCESINFORMAL LOANSINFORMATION REQUIREMENTSINSTITUTIONAL CAPACITYINSTITUTIONAL LOANSINSURANCEINTEREST RATEINTEREST RATE CAPSINTEREST RATESINTEREST RATES ON LOANSINTERNATIONAL FINANCEINVENTORYINVESTINGINVESTMENT CAPITALINVESTMENT LOANSINVESTMENT PURPOSESLACK OF ACCESSLARGE CITIESLARGE ENTERPRISESLEASINGLENDING REQUIREMENTSLETTERS OF CREDITLIABILITYLIQUIDITYLIVING STANDARDSLOANLOAN AMOUNTLOAN AMOUNTSLOAN ANALYSISLOAN APPROVALLOAN MATURITYLOAN OFFICERLOAN OFFICERSLOAN PRODUCTSLOAN SIZELOAN SIZESLOAN STAFFLOAN TERMSLOANS FROM FRIENDSLOCAL GOVERNMENTSLONG-TERM INVESTMENTLOW MINIMUM BALANCESMARKET RISKMARKET SHAREMARKET SIZEMEDIUM ENTERPRISESMFIMFISMICRO ENTERPRISESMICRO LOANSMICROCREDITMICROENTERPRISESMICROFINANCEMICROFINANCE CLIENTSMICROFINANCE INSTITUTIONMICROFINANCE INSTITUTIONSMICROFINANCE LOANSMICROFINANCE MARKETSMICROFINANCE SECTORMONEY TRANSFERSMORTGAGEMORTGAGE LOANSMORTGAGESNEW BUSINESSNEW BUSINESSESNEW MARKETOPERATING COSTSOPERATIONAL COSTSOUTSTANDING LOANSOVERDRAFTOVERDRAFT FACILITIESPARTNER BANKSPAYMENTS SERVICESPEER REVIEWPERSONAL CREDITPERSONAL CREDIT CARDSPORTFOLIOPORTFOLIO RISKPORTFOLIOSPROFITABILITYPUBLIC POLICYPUBLIC RECORDSRECEIPTSREGULATORY AUTHORITIESREGULATORY CONSTRAINTSREGULATORY FRAMEWORKREGULATORY POLICIESRETURNSRISK MANAGEMENTRISKY LOANSRURAL LOANSSAVINGSSAVINGS ACCOUNTSSAVINGS PRODUCTSSECURITIESSMALL BUSINESSSMALL BUSINESS LOANSSMALL BUSINESSESSMALL ENTERPRISESMALL ENTERPRISESSMESME CLIENTSSME FINANCESME FINANCINGSME SECTORSUBSIDIARYSUPPLIERSSUPPLY CHAINSUPPLY CHAINSTAXTECHNICAL ASSISTANCETRADE FINANCINGTRANSACTIONTRANSACTION COSTSVILLAGEWAGESWIRE TRANSFERSWORKING CAPITALReportInternational Finance Corporation10.1596/21715