Building SMEs Climate Resilience is a combined insurance-credit mechanism using a USD 10M-20M insurance facility to unlock up to USD 200M in lending for climate-resilient SMEs in Brazil.

Small businesses in climate-vulnerable regions of Brazil face increasing losses from extreme weather events, such as floods and storms. These risks raise default rates and lower credit scores, making lenders reluctant to provide financing. As a result, many SMEs operating in high-risk areas struggle to access credit or insurance, limiting their ability to recover from climate shocks and maintain stable economic activity.

Building SMEs Climate Resilience, developed by Stone and Zurich, combines loans and climate insurance to help small businesses in climate-vulnerable areas access financing. Insurance is built into each loan, protecting both the business and the lender if a climate disaster occurs. By reducing the risk of losses, the mechanism helps unlock more affordable lending for small businesses. A portion of the financial returns helps sustain the insurance pool over time, while financial education programs support businesses in managing risks and strengthening their resilience.

According to Stone and Zurich, the instrument aims to strengthen climate resilience for up to 200,000 small and medium-sized enterprises (SMEs) operating in high-risk areas. By helping reduce post-disaster loan defaults and business closures, it seeks to stabilize cash flows and support faster recovery after extreme climate events, enabling vulnerable businesses to continue operating and sustaining local economic activity.