El Salvador explores low-interest loans backed by Bitcoin

El Salvador’s Bitcoinization is moving at full speed. Next on the orange agenda: providing low-interest loans backed with Bitcoin (BTC), to small and medium-sized businesses.

Although the details of the BTC loan are not yet available, Monica Taher, an advisor to the government of El Salvador was very direct in a Facebook Live Audio that took place yesterday. The topic was “Bitcoin loans at lower interest rates.”

Paul Steiner, President of CONAMYPE (the National Institute for Small and Micro-Businesses), shared his belief that loans could be implemented using the El Chivo wallet created by the government.

The El Salvador business landscape is dominated small and micro-businesses. Bitcoin-backed loans offer a chance to rectify this situation. Steiner illustrated:

El Salvador is home to approximately 1.2 million businesses. 66% of these businesses are micro-businesses. More than 90% of micro-businesses can be self-financed via informal loans and loan sharks.

He gives the example of a $100 loan that is taken out by micro-businesses. The terms are usually for full repayment within 20 days, while the interest rate can be as high as $15 per day. Sometimes, these loans have an annual interest rate of more than 10,000%.

The interest rate offered by BTC-backed loans will be lower than informal lenders, loan sharks and banks.

Andrea Martia Gomez is a DeFi loan protocol project manager. She shared that “some crypto-enthusiasts in El Salvador have already started using crypto solutions like Defi because they offer a greater ease of use and a higher rate than banks.”

Related: El Salvador’s Bitcoin wallet joins 4M users through the Netki partnership

Alessandro Cecere was also present as a Community Manager at Ledn, a Canadian Bitcoin firm. Ledn recently launched BTC backed mortgages. He wondered if El Salvador could follow their lead and if Bitcoin might be used as collateral to mortgages in the near future.

Steiner was open for discussion and optimistic about Bitcoin’s future. His priority is to improve business conditions for SMEs. Monica Taher, when asked about loans for housing or other avenues, stated that while the loan product was not available for small businesses, it would be for micro-businesses. “We will discuss mortgages later.”

Steiner summarized the vision by referring to the challenges micro-businesses face here in El Salvador.

Companies need a way to finance their operations. Bitcoin offers that possibility.

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Eileen Wilson

Eileen Wilson –Technology and Energy My Name is Eileen Wilson with more than 5 years of experience in the Stock market industry, I am energetic about Technology news, started my career as an author then, later climbing my way up towards success into senior positions. I can consider myself as the backbone behind the success and growth of topmagazinewire.com with a dream to expand the reach out of the industry on a global scale. I am also a contributor and an editor of the Technology and Energy category. I experienced a critical analysis of companies and extracted the most noteworthy information for our vibrant investor network.

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