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The government of El Salvador will provide cryptocurrency-based loans to small companies. Conamype, the National Council for Micro and Small Businesses, will be the link between investors and a decentralized finance protocol called Acumen that will be able to fund stablecoins. The aim is to help small investors with no credit history in the country.
Small companies in El Salvador will receive cryptocurrency-based loans
Small companies in El Salvador will be able to access funds to provide their companies with cryptocurrencies. The program is designed to include owners of small companies that still don’t have access to traditional financial instruments. The loans will be made available through Conamype, the National Small and Micro Business Council, which plans to make these loans available to its registered members.
The announcement was made on Facebook by Paul Steiner, President of Conamype, and Monica Taher, International Affairs for Technology and Economics. stream January 19. The organization will provide $10 million in funding to these companies using Acumen, a decentralized finance protocol based on Solana.Details of the deal are still being finalized, but since Acumen provides loans in USD-pegged tokens, volatility will be minimized, such as USDT And USDC, the borrower repays the loan in U.S. dollars.
The current state of the lending market
To underscore the importance of these loans in the financing faced by SMEs in the country, Steiner explained that most small companies are still not part of the country’s traditional financial system. He said:
Loan sharks charge 20% to 25% per month. This is what we want to avoid.
According to Steiner, this is because more than 80 percent of small companies in El Salvador do not have bank accounts.However, in order to obtain these loans, due to the introduction of Bitcoin Law domestic.
Steiner also touched on the APRs on the loans, saying that based on the risk of each analyzed item, they would be among the lowest in the market — even more so if borrowing from loan sharks was the only option.
What do you think of the cryptocurrency-based loans that El Salvador is ready to offer? Let us know in the comments section below.
Image Source: Shutterstock, Pixabay, Wiki Commons
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