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Thousands of Salvadorans with no credit history can access loans now to make home improvements and expand their home businesses.

El Salvador has developed a unique and sustainable financial business model that enables low-income consumers to improve and expand their homes by mobilizing resources from both the public and private sectors, including commercial banks and multilateral institutions.

These resources are subsequently channeled to microfinance institutions around the country, serving a market of low-income borrowers and homeowners who otherwise would be without access to credit.

Central to this financing model is FONAVIPO, the state-owned National Low-Income Housing Fund. It acts as a second-tier financial lender to 55 microfinance institutions, including cooperatives and other nongovernmental organizations, which operate under a different set of rules compared with regulated, commercial banks. FONAVIPO also administers a government subsidy program that provides homeowners with grants of up to $3,000 to enable less affluent consumers to participate in the housing market.