(FinChannel) IFC, a member of the World Bank Group, strengthened its support to Ecuador’s women-owned small and medium sized enterprises (SMEs) with a new US$55m loan to Banco Pichincha, a bank that strives to sharply boost its lending to women entrepreneurs.

The loan consists of US$20m from IFC and US$15m from the Women Entrepreneurs Debt Fund, a private investment fund managed by IFC Asset Management Company. The Fund is part of Goldman Sachs 10,000 Women and International Finance Corporation’s (IFC) Women Entrepreneurs Opportunity Facility, a partnership to increase access to capital for women entrepreneurs, according to IFC.

Launched in 2014, this first-of-its-kind Facility aims to help close an estimated $285 billion global credit gap for women-owned small and medium enterprises (WSMEs) and enable 100,000 women entrepreneurs to grow their businesses. An additional US$20m was invested by Finance in Motion, a German investment company.

Banco Pichincha seeks to use the new financing to increase by about 50 percent its loans to SMEs in Ecuador at a time when the country is recovering from a devastating earthquake in April. Boosting financial access for SMEs is crucial to the country’s sustainable growth as they are a key driver of economic activity and job creation. The bank expects to expand its reach in the next three years by about 2,500 women-owned SMEs with the new resources.

“At Banco Pichincha we have seen first-hand that investing in women-owned SMEs leads to economic growth and job creation in Ecuador,” said María Belén Sánchez, Product Manager from Banco Pichincha. “There is a lot more that can be done to ensure that women entrepreneurs can access capital. By partnering with IFC we are addressing the obstacle they face in gaining access to capital,” she said.

According to studies from IFC and McKinsey Enterprise Finance Gap Database, nearly 37 percent of formal SMEs are women owners, of which 71 percent are unserved or underserved. The credit gap for formal women-owned SMEs in Ecuador is estimated at US$3 billion per year.

“IFC is continuing to expand its support for Ecuador after the earthquake,” said Carlos Leiria Pinto, head of IFC for the Andean region. “We are confident that our partnership with Banco Pichincha represents will help boost economic growth in Ecuador and is evidence of our commitment to provide opportunities for women entrepreneurs who face the challenge of obtaining financing for their businesses,” he said.

“Access to capital is a major obstacle to growth for women entrepreneurs,” said Noa Meyer, Managing Director and Global Head of Goldman Sachs 10,000 Women. “Goldman Sachs research shows that closing this gender credit gap could increase per capita income by around 12 percent in emerging markets by 2030. This new loan to Banco Pichincha will place more capital in the hands of women entrepreneurs in Ecuador who will drive future economic growth and job creation.”

The project will also help Banco Pichincha nearly double the climate smart activities in a three-year period as it undertakes new climate smart projects including energy efficiency, renewable energy, water efficiency, and cleaner production projects. Banco Pichincha is already a pioneer in Ecuador for financing climate smart activities, as it has experience backing projects for energy efficiency, renewable energy and green buildings.

The loan is part of a wider engagement by IFC with Grupo Pichincha, which also has operations in Colombia, Peru, the United States and Spain. The group is focused on increasing access to finance to low income households and SMEs, making it a strategic partner for IFC in the Andean Region.

IFC’s strategy in Ecuador is centered on helping organizations that promote financial inclusion. IFC’s support to Ecuador began when it became a member of the institution in 1956, and since that time, it has invested some US$685m in the country.

IFC’s Banking on Women program is playing a catalytic role in helping financial institutions meet the needs of women entrepreneurs in a sustainable and profitable way. Since its launch in 2010, the program has made 37 investments globally totalling over $1 billion and has launched 28 advisory projects.

Goldman Sachs 10,000 Women and IFC provided anchor investments to create the Facility and are working with local banks in emerging markets to catalyze existing capital for women-owned SMEs by addressing barriers to financial access. Since the Facility was launched in 2014, it has made over US$550m in commitments to banks in 16 countries, increasing lending to women entrepreneurs.