Corfo favors lending fintechs with latest announcement

Contxto – Corfo—Chile’s economic development agency—is giving fintechs a fighting chance.

A couple of weeks ago, authorities had announced the launch of its “Growth Guarantee Fund” (Fondo Crece). This fund will consist of US$150 million that would serve to back loans that financial institutions grant to small and medium-sized enterprises (SMEs) in Chile.

At the time of the announcement, only businesses registered under the country’s Financial Market Commission (CMF) would benefit from this fund. In short, traditional financial institutions.

However, the Corfo recently stated that other non-banking institutions (like fintechs) will also be eligible to access this fund in case of non-payment from its borrowers. 

To be eligible though, they’ll need government clearance.

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Corfo wants fintech inclusion

Why it’s a big deal: It would appear that startups and governments run in different circles. Nonetheless, regulations can make a profound difference in making or breaking startups. In fintechs’ case, they need an equal playing field to compete with traditional institutions. However, governments can help or hinder these opportunities.

In this case, because the Corfo is allowing fintechs to benefit from this fund, they’re gaining leeway to manage capital in accordance with their business thesis. Something that’s greatly needed as SMEs are often turned away by banks and typical financial institutions.

To take things further, officials in Chile (and all Latam governments for that matter) should seek to award startups more government contracts and deals. It illustrates that these businesses are capable and deserve a place next to large-conglomerates and foreign companies.

Moreover, it nourishes the country’s ecosystem and makes it more startup-friendly.

Related articles: Tech and startups from Chile!

-ML