Mexico, with the highest interest rate differentials between small and large companies: OECD

Posted On: March 30, 2022

Mexico, with the highest interest rate differentials between small and large companies: OECD Asking for loans is not the same for a micro small and Medium Enterprises With respect to large companies, there is also a big difference in asking for it in Mexico, because it will also be more expensive for small businesses compared to European countries, the United States and even with respect to Brazil, according to the Organization for Economic Co-operation and Growth (OECD).

According to study OECDin which 41 countries are involved, explains that the largest companies in Mexico have loans at lower interest rates than small and medium-sized companies (SMEs), compared to other countries.

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For example, in Mexico a large company earns an interest rate of 6.2%, while a small and medium-sized company will obtain a loan at a rate of 11.7%, which translates to a spread of almost 5.5%, according to the agency.

Mexico, Colombia and Peru are the countries with the highest interest rate differentials between SMEs and large corporations, while the smallest differences are in the United States, China, Brazil, Poland, Belgium, South Korea, United Kingdom, Hungary, France, Spain, among others.

In the OECD Financing for SMEs and Entrepreneurs 2022 document it is explained that the pandemic mainly affects small businesses, for example, in Mexico the number of SMEs has decreased from 4 million 860 thousand to 4 million 470 thousand, which means net. reduction to 8.06% of the total number of small businesses between May 2019 and September 2020.

Another effect noted in small Mexican companies is that before the pandemic, in 2019 SMEs registered an average of three employees per unit and that number was reduced to two employees.

According to the OECD, the outstanding credit of small and medium enterprises decreased from 434 billion pesos in 2019 to 404 billion pesos in 2020, this is considering that in that year new loans were requested by entrepreneurs and Small Business entrepreneurs.

Mexico was one of 14 of 41 countries in 2020 that saw a decline in lending to SMEs, the OECD said.

The organization said that in general many businesses are adapting to new consumer requirements and behavior, however, the impact of the pandemic in 2020 is affecting businesses as the global contraction is 3.4% and global trade is down 8.5% in real terms.

“SMEs and entrepreneurs are at the center of the impact of the crisis, prolonging business closures, suppressing demand and breaking global value chains, which threaten the survival and viability of enterprises and entrepreneurs” and despite the fact that in 2021 the situation improves , the risks persist.

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