El Salvador keeps on making major strides towards crypto adoption, with its next project to introduce Bitcoin-supported low-interest loans to small and micro-businesses.

Specifically, although the particular information of the BTC loans is yet to be publicly revealed, Mónica Taher, technological and economic international affairs director for the government of El Salvador, reportedly showed some light into the matter via a discussion on a Facebook Live audio room. 

“The Bitcoin small loans will provide access to digital money for the unbanked while helping them create a credit history. El Salvador’s economy will strengthen by empowering its small businesses.” Mónica Taher reportedly revealed. 

Paul Steiner, president of CONAMYPE (the national institute for small and micro-businesses), further claimed that the implementation of the loans feature would be compatible with the authority-designed El Chivo wallet.

The business scene in El Salvador reportedly witnesses the dominance of small and micro-businesses, and the Bitcoin-supported loans will be a measure for rectifying the situation.

“El Salvador has roughly 1.2 million businesses in the country. Roughly 66% are micro-businesses or ‘subsistence’ businesses. Over 90% of micro-businesses are self-funded via informal loans or loan sharks.”

He additionally referred to a case where a $100 loan to a micro-business will return with full repayment within 20 days, as per standard procedure, with the maximum interest rate could be $15 daily. In a few cases, the annual interest rate for that type of loan “exceeds 10,000%.” 

Ultimately, the interest rate provided by BTC-backed loans would be lower than that of informal lenders, loan sharks, and banks.

Andrea María Gómez, a project manager for Acumen – a DeFi lending protocol – reportedly disclosed that “some crypto enthusiasts in El Salvador are already using crypto solutions such as DeFi as they offer an ease of use and a higher interest rate than banks.”