ASUNCION – Small and medium-sized businesses that have difficulties obtaining credit and funding may receive loans starting next month from the Guaranty Fund, Paraguay’s Ministry of Industry and Commerce said Wednesday.
The Fund will start off with an initial capital of more than $8 million and the ability to offer guaranties for up to five times that amount, Deputy Minister Victor Bernal said during an event marking the launch of the initiative.
Bernal said that the Fund will not set the interest rates, as they will depend on “the banks that will operate the Fund,” although he noted that these rates are currently around 12 percent.
The Fund’s manager, Carlos Gimenez, said that firms from any sector of the economy could obtain loans, although these companies must be registered with the tax agency.
Gimenez explained that the Guarantee Fund is not a subsidy, adding that failure to pay back the loans on time could lead to legal actions against debtors.
Paraguay defines small and medium-sized businesses as firms with up to 50 employees and an annual turnover of up to 6 billion guaranies ($1 million), a category that includes nearly 90 percent of all companies in the South American nation.