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In the midst of the pandemic, this industry is raising its hand to support SMEs and entrepreneurs

July 28, 2020

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In the midst of the pandemic, this industry is raising its hand to support SMEs and entrepreneursIn the midst of the pandemic, this industry is raising its hand to support SMEs and entrepreneurs

By Julio Pilotzi

More than 100 days have passed since Mexico entered a detention period due to the corona virus that plagued and shut down industrial and business operations in the country.

At this time, and after multiple efforts to smooth the curve of the COVID-19, the campaigns for healthy distance and emergency blocking have not ended, but even so the moment when Around 4.5 million micro and small and medium-sized enterprises (SMEs) have started to operate again and to make its range of products and services available to the public.

In order to continue to support more than 70% of jobs in Mexico, those SMEs that are able to resume business must face one of the greatest challenges for their company: overcoming the negative effects of the pandemic that has led to different ones Business closings, downsizing and budgets, as well as social destabilization, uncertainty on the stock markets and fluctuations in foreign exchange and market values.

This scenario of economic pessimism has generated mistrust of business people, investors and traditional banking, who are primarily seen as the arm of the business. However, there are solutions that are ready to take risks with high overdue credit ratios, late payments to loan applicants and controlled debt increases: the fintech industry.

Although it is the second largest economy in Latin AmericaThe figures assume that Mexico is only 40% financially included, among countries such as Argentina, Brazil, Chile, Colombia and Ecuador. For this reason, Mexico, along the lines of countries such as Kenya, China, Sudan, South Africa and India, must promote the role of technology as a democratizing axis financially.

In this sense, the country is currently developing. According to FintechRadar, which is run by the Inter-American Development Bank (IDB) and Finnovista, Mexico is one of the most robust fintech ecosystems with 414 startups. That number stems from the 14 percent increase last year, of which 85 are in the process of regulation by the National Banking and Securities Commission (CNBV).

The numbers estimate that Mexico only has 40% financial inclusion / Image: Depositphotos.com

Although the health crisis delayed approvals, companies can bring in their grain of sand as part of the eighth transition to alleviate the liquidity problem for SMEs and to support the planning and prospecting of strategies for resource optimization. Here are some outstanding options in the business loan category:

BAUBAP: Fintech, led by Roberto Salcedo and Luis Villarreal, offers a 24-hour microfinance service for people with no credit rating or access to traditional financial services ranging from 500 to 5,000 pesos, with just an INE.

Doopla: Fintech, led by Juan Carlos Flores, brings people looking for a loan into contact with people who have enough capital to lend so that those who apply do not pay excessive interest and those who invest generate income achieve from the conversion. Every 10,000,000 to 300,000,000 Mexican pesos must have a good credit rating, proof of income and an official identification address.

borrower: Fintech was founded and directed by Gerardo Obregón and carries out group financing, which focuses on loans between people, with which investments and loans are to be offered at competitive and fair conditions between 10,000 and 250,000,000 pesos. Prerequisites are a minimum score of 655 points from the credit bureau, the verification of earnings with bank statements and a bank account on behalf of the owner.

DISI: Platform founded by Claudio Kandel that enables SMEs to convert their electronic invoice receivables into instant liquidity. The lowest total line is 350,000 pesos and the maximum is 3 million pesos. To access this tool, documents relating to the company’s legal and tax status with a minimum age of two years of operation, documents identifying the company’s partners and honesty history that have been reported to a credit information company must be provided.

Fundary: Fintech chaired by Marcelo De Fuentes, who wants to support small and medium-sized companies with immediate liquidity while avoiding overindebtedness of their customers, which gave their customers the opportunity during the pandemic to credit their short-term and long-term expenses and accept the prepayment without penalty and at the same time activate a new line that corresponds to 40% of the completed line, but at a lower rate, which normalizes the amount as soon as the contingency is completely overcome. Fundary offers loans between 50,000 and 10 million pesos with a term of one to 24 months;; and with a scheme of falling rates based on customer behavior from 36% and that can go down to 20%.

Today and thanks to this technological disruption, there are solutions and tools with which entrepreneurs and entrepreneurs can breathe empathetically, quickly, effectively, transparently and fairly, based on the confidence of applicants in bureaucratic processes. For this reason, the sector’s proposal is seen as interesting, which made financial institutions nervous and, beyond the efforts to stop them, consolidated their presence in the market.

And although enthusiasm for resuming daily activities is increasing, we cannot lose sight of the radar that exactly the third and fourth quarters of the year will be the most difficult for the country’s economy due to the fact Once operations resume and resources are used to meet the commitments, resuming operations will dry up the economy because it requires little liquidity to be available so that companies and SMEs can generate products and services.

The question is whether the support comes from the emerging fintech industry or whether traditional banking also behaves according to the circumstances. And above all, under what conditions and at what interest rates? And of course, as I said, to check whether they are very good registered with the National Banking and Securities Commission. The basic problem is to allow cash flow to be available on the best terms, but in the end everything is a business. As we have seen, the federal government will not find the total solution to the enormous challenges that the economy demands. Private initiative plays a big role in getting Mexico out of the huge slump it was in quarters ago. Will it be achieved? We’ll see it soon.

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