Salvadoran President Nayib Bukele is currently developing a new loan product for small businesses. It will be based entirely on bitcoin.
Some time ago, there was a discussion on Facebook about the possibility of implementing bitcoin loans with lower interest rates in El Salvador.
Monica Taher, an advisor to the Salvadoran government, announced in a post that the government intends to create loan products entirely based on bitcoin. This is supposed to be the next step in the state’s program to tame the cryptocurrency market.
BTC loan
According to Monica Taher, bitcoin loans will be helpful especially for the unbanked. They will allow these individuals to create their own credit history. This will contribute to the development of small businesses and strengthen the country’s economy. According to Paul Steiner, president of CONAMYPE, loans of this kind will be provided under the rules of another state project: the Chivo wallet.
For those who do not know, let us remind you: Chivo is a cryptocurrency wallet designed to store bitcoin, which is already used by more than 4 million Salvadorans. And the number of its users continues to grow.
Economic situation in Salvador
In El Salvador, small and micro businesses are leading the way. They account for as much as 66% of all enterprises operating in the market. Statistics show that over 90% of micro-enterprises use financial assistance from informal lenders and usurers.
The problem is serious because usurers demand horrendous commissions, disproportionate to the repayment period and the amount borrowed.
Loans in bitcoin would provide solid support for indebted entities and prevent bankruptcies. Andrea Mara Gómez, manager of the Acumen project, which uses DeFi to combine cryptocurrencies with traditional assets, mentioned that in El Salvador, quite a significant number of citizens are already using cryptocurrency solutions, as they provide more favorable interest rates for the borrower than banks and are easy to use.