NextBillion - A WDI Publication

Throughout Latin America, micro, small and medium-sized enterprises (MSMEs) are the backbone of their countries’ economies. Yet many face significant barriers when seeking access to credit at traditional banks and other lenders. These barriers are well-known and widely discussed in development circles: They include requirements for formal documentation, collateral and an established credit history — criteria that disproportionately exclude women, informal entrepreneurs and those operating in underserved regions.

This scenario constrains economic growth across the region, particularly in Brazil, where MSMEs account for over 98% of all businesses and approximately 70% of formal employment, according to the Brazilian Small Business Support Agency. Despite their importance to the broader economy, millions of these entrepreneurs continue to struggle to secure the capital needed to sustain or expand their operations.

It was in this context that Estímulo emerged as a private social impact fund in May 2020, created by leading Brazilian entrepreneurs to prevent small business closures during the COVID-19 pandemic. Though not a bank, it operates digitally to provide fast, collateral-free loans with reduced rates and grace periods, reinvesting repayments to fund new entrepreneurs. Its blended finance model combines philanthropic capital and sustainable lending to make finance more accessible and dignified. In its first five years, Estímulo has disbursed over R$400 million (US $75 million) to 6,000 businesses, with 30% led by women and 54% including women in their ownership structures.

But inclusive finance is about more than numbers: It’s equally critical to determine who is being reached, how services are delivered, and what happens when entrepreneurs are denied access to credit.

To explore these questions, Estímulo partnered with 60 Decibels. Between December 2024 and March 2025, 60 Decibels interviewed over 400 Estímulo loan applicants — both borrowers (loan recipients) and non-borrowers (those who applied but did not receive a loan). The findings highlight the impact of Estímulo’s model, but also reveal gaps that the organisation is now working to address.

Expanding financial access, diversifying reach

Among Estímulo’s borrowers, 29% were accessing credit for the first time, with women especially likely to be applying for their first-ever loan (40% of women versus 25% of men). Many described Estímulo as their only viable option, as alternatives were limited and costly.

At the same time, the data showed that most borrowers came from a relatively established segment of the market: long-standing, formal businesses in São Paulo with higher monthly revenues than informal enterprises. This reflected Estímulo’s origins during the pandemic, when lockdowns left small business owners across Brazil struggling to stay afloat. Many of those who applied were formalised businesses with some credit history — large enough to be excluded from emergency aid, but too small to access traditional bank loans. Estímulo was created to fill that gap, providing rapid, collateral-free support at a moment when options were scarce.

As the initiative grew beyond its emergency phase, it evolved into a permanent social impact fund with national reach. Ongoing data analysis — including the 60 Decibels survey — confirmed the need to deepen its presence in regions and among groups facing the greatest barriers. This insight led to an expanded focus on underserved areas such as the Amazon and the Northeast, as well as on women entrepreneurs, who often encounter higher financing obstacles than men. Estímulo now adapts its credit conditions to meet different contexts — from everyday business growth to recovery after climate-related crises like the floods in Rio Grande do Sul — helping ensure that access to finance is both inclusive and responsive.

Understanding Business outcomes and the non-borrower experience

Three-quarters of borrowers reported that their business outlook had improved, and 70% said their stress levels had fallen, with women more likely to note improvements in quality of life. None of the borrowers interviewed said their businesses had worsened, while 13% of non-borrowers reported declines.

The research also surfaced lessons about entrepreneurs who were not approved for credit. In Estímulo’s early, emergency-driven phase, loan processing systems were built rapidly, with limited staff and automated tools. Rejected applicants often received a simple denial message without understanding the reasons behind it. Since then, Estímulo has introduced instant feedback explaining credit decisions, along with multiple support channels, from WhatsApp and email to direct team contact, ensuring faster and more personalised communication.

Understanding the experience of non-borrowers has become central to Estímulo’s approach. Keeping these entrepreneurs engaged is both a way to help them strengthen their businesses and a step toward future eligibility for credit. Estímulo now offers targeted training for those not yet approved, focusing on formalisation, financial management and improving credit scores.

Training as a pillar of inclusive finance, not an add-on

One striking finding was that entrepreneurs valued Estímulo’s training almost as much as its loans: 89% of non-borrowers said its WhatsApp-based training content was easy to understand, and many applied these lessons in financial management and pricing to their businesses. Delivered through short, practical videos and messages developed with expert partners such as Google and Meta, the training covers a wide range of topics, including digital marketing, sales, finance and productivity, designed to fit entrepreneurs’ busy schedules.

Estímulo’s free entrepreneurial training is open to all, not only borrowers but also entrepreneurs who have been denied credit or have never applied for a loan. The goal is to make knowledge accessible to anyone looking to strengthen their business or prepare for future credit opportunities.

Building on this approach, Estímulo has launched an annual calendar of courses and mentoring, added certificates and progress tracking, and introduced more interactive formats such as peer mentoring and workshops. Training, together with access to credit and practical connections between entrepreneurs and partners, now forms a continuous pathway of support that helps MSMEs grow stronger and more resilient.

The importance of listening and adaptation

For Estímulo, the 60 Decibels study underscored that inclusive finance is not just about disbursing loans — it’s about understanding entrepreneurs’ realities and adapting accordingly. As Director Lucas Conrado explains: “Entrepreneurs themselves are the ones who truly understand their daily challenges and pressing needs. We are evolving from being just a lender to becoming a broader support system that prioritises personalised engagement.”

Brazil’s MSMEs will continue to play a vital role in the country’s inclusive economic growth. Estímulo’s experience illustrates that finance can have far-reaching impacts on these enterprises when it pairs access to capital with responsiveness and empathy. The data from this study showed Estímulo what is possible through more inclusive lending approaches: The adaptations it has made in response to that data show what is required to make these approaches sustainable.

Explore Estimulo’s impact data here.

Carla Grados-Villamar is Co-Head for Latin America at 60 Decibels; Lucas Conrado is Director of the Estímulo Impact Fund.

Photo credit: JLco – Julia Amaral