The cost of loans for entrepreneurs is higher than others due to the level of risk involved. Public banking offers lower interest. For people who want to start a small business, getting a microcredit can be a complicated task.
The difficulties begin with the requirements of private financial institutions and are difficult to comply with when there is no credit history or tax declarations, said Roberto Vallejo, of the Fifth Pillar Society of Scientific Disclosure. Not registering credit history prevents defining the client’s behavior in the face of obligations, explains the Superintendency of Popular and Solidarity Economy (SEPS).
Two other factors that limit access to credit for entrepreneurs are that they do not have adequate guarantees and do not have feasibility studies that meet the requirements. To this is added that the interest rates set by the Central Bank of Ecuador for this type of loans are higher compared to other segments.
For example, corporate production credit for companies with a sales volume of more than $ 5 million has a maximum rate of 9.33%. While the retail microcredit, for businesses with sales equal to or less than $ 100,000, pays 28.50%. (See infographic) Stalin Muñoz, general manager of the Cooprogreso credit and savings cooperative, explained that this is due to the high risk of granting microcredits.
The entity manages an average rate of 18.99%. Muñoz mentioned that the interests in Ecuador are at “reasonable levels”, due to operating costs, level of delinquency and margin of long-term sustainability.
Valeria Llerena, executive director of the Network of Financial Institutions of Development (RFD), added that microcredit is more expensive because it involves monitoring the client with periodic visits by agents, who must travel long distances. It is also due to the fact that the financial entities specialized in microcredit are not funded with the savings of their clients but with external contributions, which ends up increasing interest.
From the public banks, entities such as the Corporación Financiera Nacional (CFN) and BanEcuador offer greater accessibility to entrepreneurs with lower rates. The CFN has rates of 7.5% in direct loans. In the first five months of 2018, it granted more than $ 311 million representing an increase of 70% compared to the same period of 2017.
BanEcuador grants productive loans with interest ranging from 9.76% to 11% per annum. Between January and May of this year, it delivered $ 423.1 million to 106,314 beneficiaries.
The debate surrounding the downward revision of the current interest rates has not transcended.
El telegrafo requested information from the Superintendency of Banks (SB) and the Association of Private Banks (Asobanca), but none of the entities responded. In May, private banks placed $ 1,603 million in loans to microenterprises, which represents 6% of the total gross portfolio ($ 26,034 million), according to Asobanca.
The credit in the cooperatives, as of June 15, amounted to $ 7,303 million, according to the Central Bank Weekly Monetary Bulletin 594. In February of this year, Resolution 437-2018-F came into effect, which reduced interest in retail microcredit, simple accumulation and extended accumulation.
The SEPS indicated that it is still a very short period to evaluate the impact, but the balance of the microcredit portfolio between February and May has increased by 6%. It manages average effective rates of 19.57% for the microcredit of extended accumulation, 21.65% in simple accumulation and 21.87% for retail microcredits.
Llerena commented that the debate should include microfinance, where the lower sectors of the economy are located, those that look for very small credits of $ 10 or $ 50 and that are located in rural areas of the country. (I)