If trade is a powerful economic engine, then trade finance is the fuel that makes it hum, both on the international and domestic level.
Access to adequate and timely Trade and Supply Chain Finance (TSCF) solutions is a key element for economic development, but this is not simple for companies in Latin America and the Caribbean. Point of fact, access to finance for trade, particularly in developing and least-developed countries, plays a crucial role in facilitating local and international trade transactions.
Sellers require financing to process, manufacture, store or export their products before receiving payments from their clients, and they wish to obtain payments from their clients as soon as possible. Buyers need credit to acquire goods, raw materials and equipment and, conversely, wish to extend payment terms to their suppliers as much as possible. In this scenario, the availability of TSCF plays a crucial role in facilitating trade and closing the financing gap between the parties.
IDB Invest, through its TSCF products, addresses these needs from buyers and sellers in the region by offering a set of efficient, reliable and comprehensive financial solutions for every stage of a clients' value chains, supporting their local and international trade activities.
Trade Finance Facilitation Program
Launched in 2005, the Trade Finance Facilitation Program (TFFP) is an effective solution created to support access by the region's banks to international trade finance markets through technical cooperation, knowledge creation, and financial products. Under the TFFP, the IDB and IDB Invest provide short-term loans to local banks to finance portfolios of eligible trade transactions and credit guarantees to global banks to mitigate any risk associated with trading instruments issued by banks in Latin America and the Caribbean.
The TFFP network is comprised of over 100 banks in the Latin American and Caribbean region and over 100 correspondent banks worldwide. See our complete list of correspondent banks below.
Supply Chain Finance Solutions
Capitalizing on our expertise in the traditional trade finance arena, we are expanding our product offerings toward value chain finance solutions, aiming to improve competitiveness and access to finance for buyers and sellers in the region.
Value chain finance solutions help companies free up the cash that is trapped in their supply chains, shortening the cash conversion cycles, that is, the time it takes them to sell inventory, collect payments from customers and pay bills.
By providing access to the major supply chain in Latin America and the Caribbean, these kinds of solutions allow IDB Invest to have a bigger and more effective impact on small and medium buyers and sellers, contributing to economic growth in the region.
In some cases, IDB Invest may become a part owner of a company and share in the risks and potential rewards of a business venture.
As a multilateral development bank, we can structure loans and bonds to expand the pool of funds available for investment in the private sector.