Entrepreneurs in Latin America who want to launch or expand environmentally friendly businesses are often stymied because they do not have access to bank loans or investment capital. Now, four funds managed by nonprofit groups offer much-needed capital.

The oldest such fund in the region is Environmental Enterprises Assistance Fund and its subsidiary, Empresas Ambientales de Centroamérica (EACA), both formed in 1990 to support small- and medium-sized environmental companies. A board of directors reviews business plans to ensure that proposals meet a range of criteria, such as potential for profitability, experienced management, private-sector ownership, and low environmental impact. EACA has made 22 investments in renewable energy, sustainable forestry and agriculture, recycling, and ecotourism companies.

EACA marketing executive Emmanuel Hess points to several successfully funded projects: a recycling business in Honduras that collects and exports aluminum waste products to the United States; a producer and exporter of furniture made of teak and gmelina harvested sustainably from tree farms in Costa Rica; Posada Cerro la Vieja, an eco-lodge in the Mesoamerican Biological Corridor in Panama.

One of the newest funds was created in 1999 by the EcoLogic Development Fund, a conservation group working in community-based development and biodiversity conservation in Central America. EcoLogic Enterprise Ventures (EEV) has already granted six loans to small-scale farmers of certified organic and shade-grown coffee, cocoa, and cardamom. Executive director Shaun Paul points out that EEV fills a definite need, since most low-income farmers who want to go organic lack conventional bank guarantees, usually land titles. "EEV recognizes creative collateral, such as harvest inventories or machinery," he says. "The guarantee we accepted from an organic cardamom cooperative were the cardamom dryers and product in safe storage."

He adds that EEV evaluates proposals using three screens: financial, social and environmental. In addition to being financially viable, a business must demonstrate that it will have a positive social impact on low-income people and no negative environmental impact, or ideally, a favorable effect on biodiversity. EEV makes relatively small loans, from u$s 25.000 to u$s 100.000, to producers that already have an established market.

Conservation International, a U.S.-based nonprofit group, recently launched the Conservation Enterprise Fund, which will make debt and equity investments, ranging from $25,000 to $250,000, in businesses involved in ecotourism, sustainable agriculture, and marketing of forest resources such as fibers, nuts, and oils.

Another U.S. conservation group, The Nature Conservancy (TNC), is focusing on green businesses in a different niche. In collaboration with the Inter-American Development Bank, TNC has a u$s10 million fund called EcoEnterprises, with capital financing support available to ecologically and socially responsible, small-to-medium-sized business projects in Latin America and the Caribbean that are sponsored by environmental organizations in partnership with the private sector. EcoEnterprises is targeting four business categories: alternative agriculture, ecotourism, forest resources, and sustainable forestry.

Meanwhile, World Resources Institute (WRI), based in Washington, D.C., is ready to play matchmaker: bringing together promising eco-enterprises with available financing. WRI's New Ventures will provide qualifying environmental enterprises in Latin America with free management consulting services, help in obtaining funding, and access to a network of business and environmental consultants.

According to regional manager Norissa Giangola, New Ventures hopes to identify qualifying proposals via a competition with a u$s 100.000 prize awarded to an outstanding eco-business plan and by holding the Environmental Investor Forum in September in Río de Janeiro. The deadline for submitting plans that will be featured at the Río Forum is July 30; 12 green entrepreneurs will be selected to give project presentations. The winner of the business plan competition will also be announced in Río.

Giangola says that New Ventures hopes to encourage entrepreneurs to consider launching environmental businesses. Because companies in Latin America tend to be family-owned, she points out, there is not a large entrepreneurial tradition, and few businesses are financed by private capital. "Latin American economies are presently commodity-based," she notes. "Companies are exporting products without value-added. Unless that changes, Latin American products are not going to be competitive. Taking advantage of growing demand for environmental and social services and products is one strategy, and a smart business decision." @