Uruguay's Paigo lands $5M debt facility from IDB Lab to widen MSME credit

What's the deal? PaigoDealroom has a profile for this one. Try Dealroom →, a Uruguayan fintech, has secured a loan of up to $5 million from IDB LabDealroom has a profile for this one. Try Dealroom →, the innovation and venture arm of the Inter-American Development Bank Group. The debt facility funds the expansion of productive credit for micro, small, and medium-sized enterprises (MSMEs) in Uruguay.

What's the endgame? Founded in 2018, Paigo uses alternative data, analytics, and AI models to assess credit risk for small businesses. Its MSME product integrates with payment platforms such as Handy, using sales and transaction data to size loans and tie repayments to each business's real cash flow.

The approval forms part of a wider package of up to $10 million, with another $5 million possible later. The financing targets women-led businesses, founders without credit history, and firms shut out of traditional lending.

Why now? In Uruguay, more than 90% of companies are MSMEs, and most have lacked a practical path to credit. "The IDB Lab support to fund this operation is an enormous source of pride for us and ratifies our purpose of achieving inclusion and access to credit," said Paigo chief executive officer Rafael Mantero (translated from Spanish).

Many small firms face barriers to formal credit due to limited banking histories and collateral requirements that do not fit their income flows, according to IDB Lab. The gap is regional: the IDB estimates nearly half of formal small and medium-sized businesses in Latin America and the Caribbean face financial constraints.

The signal: This is not a conventional venture round but development capital aimed at scaling loans to underserved businesses. Its impact will hinge on whether Paigo can turn the money into sustainable access to credit, particularly for the women-led firms it is targeting.

Read more: elpais.com.uy

Image credit: Generated with Gemini