Willemstad/ Philipsburg:--- According to a study by the Centrale Bank van Curaçao en Sint Maarten (CBCS), microcredit is a valuable financing tool for entrepreneurs in Curaçao.
However, its overall impact on economic development is limited. The findings suggest that better alignment between loan amounts, expenditure plans, and business potential, as well as more targeted support for borrowers after loan disbursement, can significantly improve outcomes. Streamlining the loan application process and offering more tailored and sustained guidance could better support the long-term growth of these microcredit businesses.
The research paper presents the first comprehensive mapping of the microcredit market for small businesses in Curaçao. It identifies key areas to improve the effectiveness of microcredit as a financial instrument. The study is based on interviews with representatives of lending institutions
and survey responses from clients who have received microloans in recent years. The survey explored the characteristics of entrepreneurs and businesses that have obtained microcredit and the conditions under which such loans are most successful.
Four institutions have offered microcredit in Curaçao since the 1990s, three of which remain active in this market segment today. Together, they extended 403 loans until June 2024.
The analysis highlights the crucial role of these institutions in providing microcredit to entrepreneurs who lack access to traditional financing, particularly those starting a business.
However, the findings also reveal that startups face greater challenges in repaying loans and achieving profit growth, underscoring the difficulties faced by new businesses in leveraging microcredit for sustained growth.
The data further indicates that while significant guidance is provided before loan disbursement, less attention is given to post-loan support, despite borrower feedback highlighting it as crucial for long-term success. Extending support beyond the initial loan phase and tailoring it to the type and growth stage of the business could significantly improve business outcomes.
Although the microcredit market is a relatively small segment of the financial sector in Curaçao, small businesses remain an important contributor to employment, economic activity, and innovation. This study emphasizes the significant untapped potential of microcredit. Improving and scaling up initiatives could reduce barriers to finance for small businesses and generate positive outcomes for the broader economy.
The CBCS extends its sincere appreciation to the participating institutions and borrowers for their valuable contributions to this research.
The research paper is available at: https://www.centralbank.cw/functions/research.
Willemstad, April 23, 2025
CENTRALE BANK VAN CURACAO EN SINT MAARTEN