Investing in Access to Finance in El Salvador
Four businesses that are expanding financial inclusion with USAID support
This blog originally appeared on USAID’s Medium. Read the original piece in English and Spanish.
By Natalie Alm, Strategic Communications Advisor, USAID INVEST
Lack of access to finance is one of the leading causes of economic inequality in Latin America. In El Salvador, nearly 70% of adults don’t have access to a bank account. For an individual, this may force them to seek funds from loan sharks at predatory rates. For a small business, the lack of access to finance prevents them from growing and expanding into new markets.
USAID, through its INVEST initiative, is helping to facilitate investment into key sectors, including financial inclusion — ensuring financial products are accessible, affordable, and meet the needs of the consumer — to help El Salvador become a more prosperous, safe, and resilient country.
Between 2021 and 2024, USAID helped 12 businesses raise over $40 million, of which $31 million was for the financial inclusion sector. The investments focused on financial technology or “fintech” companies that are making financial products more accessible, affordable, and tailored for individuals and businesses by way of new technologies.
Here are four of the fintechs that received investment to expand access to finance with USAID support.
Microfinance with macro impact
1. Optima Servicios Financieros primarily lends to microenterprises that cannot obtain loans from traditional banks. Optima helps its customers — 30% first-time borrowers and 75% in the informal economy — build a credit record by putting together documentation, and provides education and technical assistance to help them develop their business. In 2023, Optima launched its first product targeted to women borrowers, who make up 44% of its client base, and launched a new digital wallet platform tailored for microentrepreneurs. With USAID support, Optima secured over $15 million in new investment, which will allow the company to expand its lending to over 5,000 new borrowers.
2. DiiMO offers short-term nano loans to underserved populations at the base of the pyramid — many of whom lack access to formal banking or have been victims of predatory lending to meet their immediate cash needs. DiiMo uses an algorithm to provide fast and affordable credit, requiring only simple documentation and no collateral. Loans range from $25 to $500, with a typical loan size of $81 and an average loan term of just 45 days. The majority of DiiMo’s customers are young and low-income, and half live outside San Salvador. To date, DiiMO has disbursed over 70,000 loans to these underserved populations, with 40% going to women. USAID transaction advisory support helped DiiMO raise $1.4 million to grow its portfolio, targeting a 70% increase in new loans to unbanked Salvadorans.
Jennifer Salazar is a medical student and entrepreneur, selling clothes via Facebook. She has been a DiiMo client for the last three years, receiving incrementally larger loans. Jennifer shares that her history with DiiMo has not only built her credit record, but strengthened her determination to move her business forward. “I’m a student and also have had to work,” she says. “It’s really hard to get a credit record when you’re not a formal employee, so establishing that has been an additional benefit for me.”
Innovative Digital Solutions
3. Cubo is an online payment platform for small businesses. By simplifying and digitalizing payment processes, Cubo is making finance and participation in e-commerce more accessible to small businesses. In 2023, Cubo supported 4,000 small businesses by providing digital payment infrastructure, creating a digital credit history, and increasing their transaction capacity. With USAID support, Cubo raised over $3.5 million to grow its business and expand its footprint in the region.
4. Sostengo offers innovative and accessible vehicle insurance options through a fully digital platform. It has made insurance coverage more affordable for over 5,700 drivers, especially low-income workers who use their vehicles to generate income. Seventy-five percent of Sostengo’s clients had never purchased insurance before, as it’s not mandated in El Salvador. With support from USAID, Sostengo raised nearly $3 million to grow its operations in El Salvador and expand into other key markets, such as Guatemala and Mexico.
