Argentina-based MercadoLibre’s digital wallet, Mercado Pago, is extending BRL 600 million ($144 million) in credit line to aid Brazilian medium and small-sized business to face the economic crisis caused by the coronavirus epidemic, as reported by Reuters.
Loans will help sellers in Mercado Pago‘s platform, mainly small companies. According to Tulio Oliveira, chief executive of Mercado Pago, the digital platforms have among their clients many of the most vulnerable workers.
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Even though Brazilian banks have announced they will ease credit conditions for smaller businesses, entrepreneurs believe that credit lines are shorter and more expensive. A recent survey by Sebrae (Brazilian small-businesses industry group) found that 60% of small-business owners were not able to obtain credit since Brazil started shutting down businesses to contain the COVID-19 pandemic. Oliveira said that many small companies are below BRL 300,000 revenue threshold needed to access the government credit to fund payroll payments.
Mercado Pago and other fintechs are talking to Brazilian government to be able to pay the government’s emergency aid to vulnerable, informal workers, of BRL 600 a month. Brazilian state lender Caixa Econômica Federal has been paying workers since last week.