Interest rates on the loans could be between 6% and 10%, and this is being described as a vast improvement on the status quo.
Businesses in El Salvador will soon be able to access loans backed by Bitcoin.
Acumen, a DeFi platform based on the Solana blockchain, is teaming up with the country's National Commission for Micro and Small Enterprises — giving entrepreneurs a new way of accessing credit.
Interest rates on the loans could be between 6% and 10%, and this is being described as a vast improvement on the status quo.
Many companies in the Central American country are unbanked, making it hard to access capital because they lack a credit history. Officials say some entrepreneurs end up in the hands of loan sharks where annual interest rates hit an average of 2,300%.
As an example, a business that borrows $100 for three weeks could end up paying interest of $15 a day.
Figures suggest that 1.2 million businesses operate in El Salvador — and it's hoped that opening up access to credit will help foster investment and economic growth.
Deeper Down the Rabbit Hole
El Salvador is doubling down on its embrace of Bitcoin as legal tender — despite the world's biggest cryptocurrency falling by more than 40% from all-time highs that were set in November.
And on Thursday, President Nayib Bukele met with his Turkish counterpart Recep Tayyip Erdogan in Ankara.
Turkey has adopted a restrictive stance toward cryptocurrency in recent years, but demand for BTC has surged after the lira was plunged into crisis, with inflation racing above 30%.
It's unclear whether the talks between Bukele and Erdogan will have done anything to change the Turkish leader's attitude toward crypto. Erdogan has previously said the country is "in a war against Bitcoin," adding:
"We have absolutely no intention of embracing cryptocurrencies."
