El Salvador Wants to Give Small Businesses Access to Bitcoin Backed Loans

Bitcoin is pushing deeper into the structure of El Salvador’s economy. The Central American country is currently considering offering Bitcoin-backed low-interest loans to micro and small businesses as one of the next steps of its Bitcoinization process. The scheme will meet the urgent need of small business owners to get reasonable capital for their business.

El Salvador is considering offering Bitcoin-backed loans to small and medium-sized businesses

In a Facebook Live Audio chat held recently titled “Bitcoin Loans With Lower Interest Rates,” Monica Taher, an adviser to the El Salvador government, noted that the next point on the agenda El Salvador’s Bitcoin is to use a standard cryptocurrency to provide interest lending to small and micro businesses.

Details of how the plan works were not disclosed, but the reasoning behind the move has been explained in depth. According to Paul Steiner, president of the National Institute of Small and Medium Enterprises (CONAMYPL) of El Salvador, the need for low-interest loans in this country is very urgent. He noted that the majority of the country’s businesses are small and micro, and they have been plagued by unfairly high interest loans.

El Salvador has about 1.2 million businesses in the country, About 66% are micro-enterprises or “self-sufficient” businesses. More than 90% of micro enterprises finance themselves through informal loans or usury, he say.

As a case in point, Steiner cites that loan sharks and informal lenders often charge a daily interest fee of up to $15 on a $100 loan that will be repaid within 20 day. Bitcoin-backed low-interest loans will significantly improve the lives of these entrepreneurs, serving as “an entry point for financing.” The plan will also work through El Salvador’s official Bitcoin wallet, the Chivo wallet.

El Salvador is championing more Bitcoin adoption globally

El Salvador President Nayib Bukele, who has predicted that at least two more countries will adopt Bitcoin as a legal tender this year, may be working to see this prediction play out. He recently revealed that he will be meeting the president of Turkey, Recep Tayyip Erdogan. Turkey has shown an interest in adopting Bitcoin to help the country get out of its current state of massive inflation. Erdogan recently revealed that a bill regulating cryptocurrencies is being submitted to the country’s parliament. The bill intends to overhaul the country’s current cryptocurrency policy and open the door to Bitcoin adoption.

Similarly, Bukele’s influence has been noted in Tonga’s plans to allow Bitcoin to be used as legal tender. Former Member of Parliament of Tonga Lord Fusitu’a recently stated that the kingdom’s Bitcoin bill could soon be passed to make Bitcoin legal tender.

El Salvador has no plans to stop at low-interest Bitcoin-backed loans. During the Facebook audio chat, the idea of ​​allowing the use of Bitcoin as collateral was also mentioned.

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