Cuba’s Commerce and Credit Bank(Bandec) has provided the greatest amount of financing for self-employed workers since the adoption of Cuba’s new credit policy in 2011, with more than 30 million pesos granted in the form of loans. However, beneficiaries represent barley 5% of the close to half a million self employed workers registered in the country, reported Idayvis Pernas, representative of Bandec’sbusiness department to AIN.
AlthoughBandec has conducted an extensive publicity campaign, Pernas recognized that new economic actors continue to be reluctant to take out loans and deal with banks, due to a lack of awareness and experience, among other reasons.
The low number of credits granted by Bandec (just over 2,000 by the end of April 2015), reaffirms the importance of other sources of financing in the development of the self-employed sector, such as remittances, family loans and personal savings.
Given such a reality, Pernas noted that the bank has made the loan requirements established in Decree Law 289 of 2011 more flexible, in order to attract non-sate entities, but without compromising the business’ feasibility analysis.The aim is to support self-employed workers in the running of their businesses and in turn the country’s economy, she added.
Noteworthy among the recent changes implemented by Bandec, operating across the entire country outside of Havana, is the possibility of receiving a 20,000 (previously 10,000) peso collateral free loan, with a repayment requirement of only 50%.
Pernas highlighted that collateral guarantees have been a problem for self-employed workers, given that, despite various repayment options, some are complicated. If a vehicle, for example, is to be financed, it must be insured and manufactured after 1974.
Other measures approved by Bandec aim to attract individuals starting out in the non-state sector, through beneficial grace periods, low interest rates, simplified paperwork and exoneration from financial analysis charges.
In its need to reach people directly, the bank recently appointed a micro-credit manager, to provide assistance to workers in their area, meaning that individuals no longer have to travel to the bank’s business offices.
Given the importance of responding to the needs of these new models of economic management, Pernas stated that financial institutions must find new alternatives, such as creating specialized structures for the sector.