Credit Programs For Micro And Small Businesses 2019-2020

Credit programs for micro and small businesses 2019-2020

To mitigate the effects of Pandemia by COVID19 and reactivate the country’s economy, the federal government has promoted loans to micro and small business owners. The Buts for Welfare program has a budget of 2,5000 MDP for 2020, and the second quarter registered an advance of (pending second quarter report). On the other hand, the word credits to the word provides for a total of 25,000 million pesos in credits, (pending progress report second trimester).

Introduction

The delivery of credits to micro and small businesses is one of the measures implemented by the federal government for the revival of the Mexican economy after the crisis derived from the health emergency caused by the COVID-19. XXX. The microcredit programs for well -being and credits to the word are the main budget programs that meet this need.

The objective of this work is to analyze the characteristics, advances and results presented by the microcredit programs for well -being and credits to the word during 2019 and 2020. For this, the reports submitted by the Ministry of Finance and Public Credit (SHCP) are analyzed.and contrasts with the National Employment and Employment Blood (ENOE) to the first quarter of 2020 (source)

Credit programs

Microcredit programs for well-being, also known as well-being batches, and credits to the word, have as its main objective to promote the permanence of micro and small businesses given the situation by COVID-19 (source).

The Welfare Bank, in charge of the SHCP, is the unity responsible for sending the resources granted by the Federal Executive Power. The supports granted to the population are made through bank deposits.

Program characteristics

The general objective of "Buts for Welfare" is to promote the strengthening of the productive activities of people who have a micronegocio through monetary support, advice and training. It is in charge of the Ministry of Economy (SE) and has an approved budget of 2,500 MDP in the PEF 2020, minor in 17.6% that approved for 2019. The annual goal of this program for 2020 is to serve 508 thousand people.

To access the benefit, it is necessary to be between 30 and 67 years old, and have a micronegocio, composed of maximum 10 workers, with more than six months of operation that is not dedicated to the agricultural sector. Another way to integrate into the program is to have graduated from the Young Program Building the future and have finished the training course to start a micronegocio.

Interestless monetary support is delivered according to a scheme where four consecutive supports are given: 6 thousand, 10 thousand, 15 thousand and 20 thousand pesos. It has up to 10 months to reimburse the support and once the total is paid, the following is granted. In addition, beneficiaries take courses on budget issues, savings, credit, among others, to obtain tools that contribute to the development of their financial capacities.

Results and advances

During 2019, well -being batches exercised a budget of 27.9% lower than approved, benefiting fewer people from whom they had been scheduled. The program had the annual goal to serve 475 thousand 459 people, of which only 349 thousand 722 were attended. As for the amount of support delivered, a total of 2,852 million 754 thousand supports were granted, equivalent to 73.6% of the goal. 

The distribution of support by well -being batches indicates that the program promotes gender equality and reducing inequality within the country. 71.07% of the population served were women, so they strengthen labor and allow them to move forward their own business. Likewise, the supports were mainly channeled towards the central and southwest region of the country, with a distribution of 32.65% and 32.33%, respectively. This benefits Chiapas, Guerrero and Oaxaca, states that, according to Coneval (2018), had the highest percentages of poverty population during 2018. 

Program characteristics

It was implemented by the SE in conjunction with the Secretariat of Welfare with the objective of supporting the economic activity of the micro and small businesses before the crisis derived from the health emergency associated with COVID-19. Its budget is 25,000 MDP, however, due to the situation in which the program was created, this budget is not contemplated or approved in the PEF 2020. 

Word credits has greater coverage than well -being batches in terms of the eligible population to deliver support, but this credit must be paid with interest. To be a beneficiary you need to be of legal age and have a micro or small business not dedicated to the agricultural sector, with a minimum of six months of operation. The support consists of 25 thousand pesos per business, which will have to pay three years with an interest rate of the 6.5% annual. 

As another modality of this program is solidarity credit to the word, a program that has the same objective and benefits as credits to the word, but the requirements to be beneficiaries are different. To access solidarity credit to the word it is required that entrepreneurs have their workers registered at the Mexican Social Security Institute (IMSS) [2] and that they have not fired them for the health emergency. 

Potential population to receive support for credits

In Mexico, micro and small businesses concentrate more than half of the workers. According to the ENOE, for the first quarter of 2020, micro and small businesses group 70.3% of the employed population. 55.7% of this population works in micronegocios, composed of maximum 10 workers;and 14.6%, in small businesses, ranging from 11 to 50 workers, confronts the Inegi classification.

Of the set of workers who work in a micronegocio, 12 million 251 thousand 570 people are owners and/or employers of this, who represent the potential population to receive a loan. However, taking into account the goals of the programs mentioned above, the population that is planned to attend for 2020 amounts to a maximum of 1 million 508 thousand people [3], which represents a 12.3% of the potential population. This indicates that the population that provides to attend credit programs is a limited part of the potential population to receive support.

Final comments

Microcredit programs, mentioned in this work, have a common goal: to support the permanence of micro and small businesses. Both programs link their actions to the fulfillment of the SDGs related to gender equality, employment creation and inequality reduction. The differences of these programs lie in the monetary amounts of the support that each one grants, the charge of interest, as well as the size of the companies to which they benefit. These differences can favor the beneficiaries, depending on their needs and access opportunity.

Given the budgetary restrictions, at the time of this publication it is estimated that only 12 can be covered.3% of the potential population. In order for these programs to cover a major. If this extension exists in the second half of the year, it is essential that the execution of the program will take the greatest transparency and accountability to avoid its customer use.

References

• INEGI. 2019. National Occupation and Employment Survey, IV Quarter.
• SHCP. 2020. “Federation Expenditure Budget 2020.”Available at https: // www.Pressure transparency.Gob.MX/ES/PTP/DATA_Abierte.
• SHCP. 2019. “Federation Expenditure Budget 2019.”Available at https: // www.Pressure transparency.Gob.MX/ES/PTP/DATA_Abierte.
• DOF. 2020. “Operation Rules of the Microcredit Program for Welfare 2020."
• SHCP. 2020. “Public account 2019.”Available at https: // www.Public account.tax authorities.Gob.MX/ES/CP/2019.
• I KNOW. 2019. “IV 2019 quarterly report of the programs subject to operating rules and other subsidies” available at http: // www.Lands to the bunch.economy.Gob.mx/images/files/fourth_infor_trimestral_2019.PDF
• CONEVAL. 2019. "Ten years of multidimensional poverty measurement in Mexico: advances and challenges in social policy". Available at https: // www.CONEVAL.org.mx/measurement/mp/documers/poverty_18/poverty_2018_coneval.PDF
• WELLNESS. 2020. "Credits to the word". Available at https: // www.Gob.MX/Welfare/Actions-and-Programs/Creditos-A-LA-PALABRA-241368