Monday, June 17, 2024

New federal loan program to aid small businesses hurt by Covid

The federal government will provide loans to 60,000 small businesses affected by the coronavirus pandemic and recently imposed economic restrictions, Economy Minister Tatiana Clouthier announced Tuesday.

Distribution of the 25,000-peso (US $1,275) loans is expected to start in February and conclude before the April start of the midterm elections campaign period.

A total of 1.6 billion pesos (US $81.6 million) has been set aside for the program, the government’s second small business loans program during the pandemic. The first program also offered 25,000-peso loans, an amount that was widely criticized for not being enough.

Its announcement came after a new political group opposed to the government published an analysis that showed that the pandemic and the lack of support to mitigate its economic impact have significantly increased inequality in Mexico.

Clouthier told a press conference that 20,000 of the new loans will go to small businesses managed by women. Another 20,000 will go to businesses that haven’t laid off any workers during the pandemic and the same number will be granted to “micro-enterprises” that didn’t receive a government loan last year.

“The objective … is to support small businesses … that were affected by the impact of Covid-19 on our economy,” she said, adding that the aim is to avoid their closure and the loss of jobs.

The economy minister also said that loans of up to 250,000 pesos (US $12,740) will be made available to restaurants, which have been hit hard by the pandemic. In addition, the government will provide support for tortilla shops, or tortillerías, Clouthier said.

“We’ll provide support to tortillerías that have between one and 50 employees and need liquidity,” she said. “We’ll support them with equipment so that they become more efficient and can reduce their costs.”

Clouthier, who was President López Obrador’s 2018 campaign chief and a federal deputy before becoming economy minister earlier this month, also said that the government is seeking to attract investment from the Ford Motor Company, which recently announced the closure of three plants in Brazil.

The new small business loans scheme was endorsed by the presidents of the Concanaco and Concamin business organizations but the head of the National Council for the Development of Small Business was far less enthusiastic.

Gerardo Cleto López Becerra described the program as “half an aspirin for the cancer that micro and small businesses are suffering,” adding “we expected a more elaborate plan to match the negative [economic] impact” of the pandemic that caused 1 million small businesses to close.

Source: El Financiero (sp) 

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