El Salvador Is Preparing To Offer Cryptocurrency-Based Loans

Declaring Bitcoin as its official currency, El Salvador is preparing to offer cryptocurrency-based loans to SMEs.

Declaring Bitcoin as the official currency, El Salvador continues to take steps regarding cryptocurrencies. This time, the country, which has made a name for itself with credit-based loans, will prepare a support package for SMEs in the future. It is planned to offer $10 million in crypto-based loans to midsize companies. Although there is no clear date for this for now, it is said to be in the first quarter of 2022. The name of the company that will provide crypto-based loans to SMEs in El Salvador is Acumen. The details of the agreement between Acumen and the government of El Salvador are not clear, but Andrea Gómez, Acumen's project manager, made important statements on the subject. Saying that Acumen's loans will have an annual interest rate of 6 percent to 7 percent, Gomez added that it may reach up to 10 percent. In addition, a large 86 percent of companies in the country operate informally and do not have access to banking. 98% of these companies get loans from informal lenders who offer an average annual interest of 2,300%. Therefore, we can say that Acumen's offer will be useful. The system is said to work like this: Acumen will convert cryptocurrency into stablecoins and send US dollars to Conamype, which plans to send US dollars to Salvadoran SMEs and entrepreneurs through state-owned bank Banco Hipotecario. El Salvadorans will also pay in US dollars.