The federal government has approved almost 700,000 loans for small and family businesses to support them amid the coronavirus pandemic.

The director of the Mexican Social Security Institute (IMSS) said on Wednesday that 40,255 loans of 25,000 pesos (US $1,040) each have been transferred to small business owners to help them pay the salaries of their employees.

Zoé Robledo said that more than 97,000 loan applications have been approved by IMSS. The institute intends to distribute more than 642,000 loans to small business owners who have committed to maintaining their full workforces and paying their employees their full salaries during the coronavirus pandemic.

Borrowers are required to start making repayments in August and will have a period of three years to complete them. Loans are repayable at the central bank’s benchmark rate, which is currently 6%.

Economy Minister Graciela Márquez announced separately on Wednesday that the department she leads has approved 577,916 loans for family-run businesses forced to close due to the coronavirus crisis.

The loans, also worth 25,000 pesos each, will be transferred to the businesses’ bank accounts starting on May 4, Márquez said.

The Economy Ministry intends to distribute a total of 1 million loans to family businesses in urban areas. To qualify, the businesses’ workforces must primarily be made up of members of the owner’s family. The loans will also be repayable over three years at the Bank of México rate.

President López Obrador has pledged to provide a total of 3 million loans to poor and middle-class Mexicans to help them through the coronavirus-induced economic downturn.

The economy shrank 2.4% in the first quarter of the year compared to the same period last year but the contraction is predicted to be much bigger in the second quarter as many businesses will remain closed at least until the end of May.

Source: El Universal (sp), El Financiero (sp)