Government Rolls Out Economic Support for SMEs

President Andrés Manuel López Obrador recently announced the provision of 1 million loans worth MX$25,000 (around US$1,070) each to benefit SMEs in the formal and informal sector as a result of COVID-19. This program will be effective starting on May 4. López Obrador took the opportunity to recognize the resilience of small businessmen by calling them heroic for preventing layoffs and not canceling their workers' registrations to the social security system.

In the first stage of the loan program, beneficiaries will be selected from a census developed by the Ministry of Welfare of over 5 million companies. Applicants will be notified by a phone call and will only have to sign a simple document to receive the loan. The only guarantee to secure its payment will be the word of the applicants. Credits will be paid in MX$850 (US$36.4) installments starting in the fourth month after receiving the payment with an annual interest rate of 6.5 percent for a period of 36 months.

The government’s loan program was supported by banking institutions and funds will be received in April. Thirty banks will participate in this program, including Banorte, Santander and Banco Azteca. These financial institutions will help with the dispersion of funds without any additional fees. “We want to do it quickly and not use a lot of government employees, but do it in the easiest way with the support of the people. For this, people must be informed about how the program is going to work,” López Obrador said.

The president expressed that such credits are only destined for urban areas. For the rural sector, there will be support programs like Sembrando Vida, which will encourage rural workers to establish agroforestry production systems. This will contribute to job creations, encourage food self-sufficiency and speed up the recovery of forest coverage in an area totaling 1 million ha. This, in addition to financial support for registered people of up to MX$5,000 (US$214) per month, of which MX$500 (US$21.4) will be used as savings, paid out into an account in a financial institution. The other part may be assigned to a welfare fund. Applicants will be required to have a 2.5ha production unit available for an agroforestry project. There will be more economic support for agroforestry production including seeds, supplies and tools, as well as technical support for the implementation of agroforestry systems. Program technicians will work with farmers to share their knowledge and experiences.