The government of El Salvador is planning to roll out low interest-loans backed by bitcoin for small and micro-businesses.
The president of the national institute for small and micro-enterprises, Paul Steiner, says the facility will be supported on the government-backed El Chivo wallet.
Mónica Taher, a government advisor in the Central American nation, disclosed the plan in a Facebook Live Audio dubbed ‘Bitcoin Loans with Lower Interest rates.’
Steiner notes that the Bitcoin-backed loans would be cheaper than the informal loans, which at times attract annual interest rates of more than 10,000%. He says that the digital asset provides an entry point to business financing.
A project manager at Acumen, Andrea Martia Gomez, observed that crypto adopters in El Salvador were already benefiting from the high-interest DeFi rates.
About 60% of El Salvador’s 1.2 million businesses reportedly fall under the micro-business category, where almost 90% are funded through informal loans and shylocks.