El Salvador carries on its bitcoinization program, albeit in the midst of a thousand criticisms and difficulties. The next step is to provide low-interest bitcoin-backed loans to small and micro businesses. According to Paul Steiner, president of CONAMYPE (the national institute for small and micro enterprises), the implementation of the loans would work with the El Chivo portfolio created by the government. The business landscape of El Salvador is dominated by small and micro businesses and Bitcoin-backed loans are an opportunity to remedy the situation. Steiner explained that “El Salvador has around 1.2 million businesses in the country. About 66% are micro or "subsistence" enterprises. Over 90% of micro-enterprises are self-financed through informal loans or loan sharks ”. He cites the example that a $ 100 loan taken out by a micro-enterprise typically comes with full repayment terms in 20 days while the interest rate could go up to $ 15 a day. In some cases, the annual interest rate for such loans "exceeds 10,000%".
Ultimately, the interest rate provided by BTC-backed loans would be lower than that of informal lenders, loan sharks and banks. Andrea Martia Gomez, project manager of Acumen, a DeFi lending protocol, shared that “some cryptocurrency enthusiasts in El Salvador are already using crypto solutions like Defi as they offer ease of use and a higher interest rate than banks ". Alessandro Cecere, Community Manager of Ledn, a Canadian Bitcoin company, also participated in the discussion. Ledn recently launched BTC-backed mortgages. He asked if El Salvador could copy their example and if Bitcoin could be considered as collateral for mortgages in the future. Steiner was open to discussion and optimistic about Bitcoin's future. However, his priority is to improve the business environment for SMEs. When asked in the chatbox about the possibility of loans for other purposes or for housing, Mónica Taher reiterated that the loan product would only be available for small and micro businesses for the moment, "we will discuss mortgages later". Steiner summed up the vision referring to the challenges that micro-enterprises face in El Salvador: "Companies need an entry point for financing: bitcoin is that opportunity."ARTICLE EL SALV