The new SOFOL, a regulated financial intermediary, will take over a quality microlending portfolio, reaching over 50,000 rural (mostly women) borrowers under a village banking technology and a growing clientele of new urban borrowers. With an average loan below US$140, the portfolio is truly composed of the poorest segments of the population. By placing the microlending operations of the NGO on a commercially viable basis, a much larger number of clients can be reached.

IFC''s investment in the SOFOL would support the transition from a sustainable NGO operation to a for-profit regulated entity, by providing close to US$2 million of fresh funds to the new entity. These funds would be used to finance the portfolio purchase from the IAP. In addition, IFC''s equity investment, loan covenants and an IFC-sponsored policy statement, would strengthen Financiera Compartamos'' financial discipline, thus improving its access to capital markets. Furthermore, IFC could help the institution to secure credit enhancement if needed, boost the institution''s credibility with the authorities, the regulator, the commercial banks and the rating agencies, and introduce the institution to responsible environmental management.