HAVANA: Cuba’s growing ranks of the self-employed will be able to apply for unsecured loans of up 10,000 pesos ($400) under a new program devised by state-owned savings bank BPA, the official AIN news agency said.
The “collateral” for the loans will be in the form of a linked savings account, BPA executive Greicher La Nuez told AIN.
She said the account will grow as the debt is repaid – if the payment is 200 pesos a month, 50 pesos will remain in the account – and the accumulated amount can serve as collateral for another loan once the first is paid off.
Prospective borrowers will have to submit a business plan for “rigorous analysis” and the applicant’s background will also be reviewed.
The new flexibility benefiting “the growing economic sector” of the self-employed also includes extending the pay-off period for loans from five to 10 years, lowering the minimum loan amount and reducing documentation requirements.
BPA has also authorized municipal branch directors to grant loans for up to 100,000 pesos ($4,000), up from the earlier limit of 50,000 pesos, without getting approval from upper management.
By the end of July, 2,482 self-employed people had applied for business loans, AIN said, though adding that the volume remains low given the growth of the private sector as a result of economic reforms launched by the government of President Raul Castro in 2010.
The numbers of the self-employed in Cuba surpassed 500,000 by the end of May, according to official data.
The expansion of self-employment and small business is a key part of Castro’s plan to “update” the island’s socialist economic model.
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