Help in the face of the economic slowdown has been slow in coming, and small businesses especially have felt the pain of the credit crunch, but at least one government program to help these businesses is beginning to demonstrate results.

Growing Business: Workers on a farm north of Cartago, east of San José. Small busineses in Costa Rica, especially farmers, are benefiting from loans let by the Development Bank

Mónica Quesada | Tico Times

The Costa Rican Bank System for De-velopment, known as the Banca de Desarrollo, or Development Bank, has given loans to 243 small businesses, totaling just over $2.8 million since it was assigned that task in April 2008, according to Esteban Arrieta, a spokesman for the Casa Presidencial.

Although the Development Bank was put in place prior to the economy's recent contraction, it has proven to be a valuable asset in providing much-needed lines of credit to smaller businesses, which, in turn, save jobs, experts say.

“Small businesses have always had little access to credit,” said Carlos Arguedas, an economist with the National University. “So, more than anything else, when some of the bigger businesses are cutting employment to cut costs, it's significant for employment.”

Nearly three-fourths of the loans went to small agricultural and livestock operations, according to Arrieta. Of the rest, 19 percent was given to commercial businesses, while tourism, services and industry divided the remaining amount.

With the size of the loans averaging nearly $11,500, it's not likely the results will show up on a macroeconomic scale, said Eric Vargas, the strategy manager for Aldesa, a financial consulting firm in San José.

The weight given to the farming sector could, more or less, reflect the government's attitude toward the loans – seeing them more as a welfare effort, Vargas said.

“The amount is relatively small,” Vargas said. “But it can be a sign that this program is growing and continuing.”

While the initiative may be helping maintain jobs, the amount isn't one that would allow for significant expansions, which is what Vargas said should be the eventual goal.

Arguedas took a slightly more upbeat outlook, saying the numbers represent a significant advance, as the nation's Development Bank is offering loans where they weren't available before.

“The markets and the government have discovered that small businesses can achieve a large impact,” Arguedas said. “For all of Latin America, this represents something important for employment and production.”

Both men agreed that it's important these small loans are available, especially during a recession.

“We need to take into account that small and medium businesses are facing a strong headwind right now, and the faster we can advance these measures, the better prepared they will be,” Vargas said.

He said the long-term goal of providing small and medium-sized businesses with access to loans is one of the most important initiatives in strengthening the Costa Rican economy. That, in turn, will loosen the hold that foreign direct investment and tourism currently have on the country, Vargas said

“If we're able to do this in larger amounts, then we'll be taking a big step forward,” he said. “Then we'd be giving much more ownership to Costa Rican citizens, which will make us a lot more competitive.”

For more information, contact the Development Bank at 2248-1650.