What is Formal Credit

Financing is a key issue for companies to grow. In Latin America, small and medium enterprises face difficult challenges when trying to get the necessary resources they need to grow or just stay in the market. From excessive paperwork to high interest rates, difficult access to credit is a challenge that has prevented companies from growing, reaching new markets, or just surviving in the markets during the first stages of operation. This, consequently, has an impact on the economic development of the region. The current macroeconomic situation, characterized by the end of a raw material boom, brings an additional issue to a normally difficult situation. This chapter therefore analyzes the current situation of five Latin American emerging economies and then presents a set of financial instruments that could help SMEs to get resources easily.