Above: downtown Basseterre (CJ Photo)

By the Caribbean Journal staff

Around 77 percent of banks in Latin America and the Caribbean expect to increase credit for small and medium-sized enterprises (SMEs), according to a survey conducted by the Inter-American Development Bank and Felaban.

According to the report, which surveyed 106 banks in the region, 87 percent of midsize banks and 72 percent of small ones have a specific SME department to deal with the SME segment.

Confidence in the SME segment also remains strong, with 89 percent of banks approving loans with maturities of three years or more to SMEs.

But while nearly two-thirds of banks foresee a more prosperous future for SMEs for the remainder of this year and 2012, the survey shows a decrease in optimism to 62 percent, 21 percentage points below the previous year.

The IDB said it was possible that this was due to the global economic situation.

And despite the plans for increased credit, big obstacles remain that could hinder financing for SMEs, the IDB said, the largest being the level of informality.

Almost 56 percent of banks mentioned this issue, which creates a lack of trustworthy information that makes it difficult to assess credit risk.

The survey was developed by Argentinean consulting firm D’Alessio.