Robert Mosbacher, president and CEO of the Overseas Private Investment Corporation (Opic), has announced an agreement with a leading American bank that will create a US$100mn lending facility that will form the basis of a new programme targeting US small business projects in emerging markets.

Opic will provide a loan guarantee to Wells Fargo HSBC Trade Bank to support a portfolio of loans to US small and medium-sized enterprises (SMEs) or their affiliates for projects in Opic-eligible countries. The project is expected to generate up to 50 loans over the life of the facility, as well as more than 1,000 host country jobs by its fifth year. Loans will range from US$3mn to US$15mn.

The Wells Fargo guaranty is the first part of a strategic alliance among financial institutions, small business consultants and law firms, all trained and certified by Opic, to facilitate efficient delivery of Opic funding to developmental, creditworthy SME projects.

Called the Enterprise Development Network (EDN), it is intended to leverage US banks’ extensive grassroots networks and their existing knowledge of individual markets across the country, and extend the reach of Opic’s growing small business programmes.

EDN’s structure is twofold. First, it will support selected financial institutions, called designated lenders, in developing the network’s lending capability to American SMEs, which will enable Opic to make better use of its staff resources.

Second, a network of Opic-approved US private sector financial consultants, called loan originators, will advise SMEs in documenting and arranging international projects, which the loan originators will submit to the designated lender for financing. The selection of Trade Bank as the initial designated lender, as well as 15 loan originators, was based on their responses to recent calls for proposals issued by OpicC.

“For American lenders such as Wells Fargo, Opic’s Enterprise Development Network has the potential to unlock an entirely new niche market for their services. It offers them a valuable opportunity to expand their client bases into dynamic emerging markets overseas, and a new means to service those clients by decreasing capital requirements for their financing,” says Mosbacher.

“For US small businesses, too, the Enterprise Development Network will improve access to the kind of credit for overseas projects that is often difficult to obtain,” Mosbacher adds.

An analysis commissioned by Opic in 2004 concluded that a network such as EDN would be the most cost-effective way for Opic to meet growing demand by American SMEs for the agency’s support.