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Contxto – News is buzzing about the insufficiency of government-funded credit and support packages for small business. And for some time now fintechs have been stepping in to offer additional loans or more favorable terms for these entrepreneurs.
And in Brazil, e-commerce giant Mercado Libre is also joining the loaning game, specifically, through its financial services arm, Mercado Pago. In order to help small and medium-sized enterprises (SMEs), Mercado Pago announced it would extend a R$600 million (about US$114 million) credit line.
This money would be destined particularly for sellers on Mercado Libre’s platform.
Mercado Libre and e-commerce merchants’ financial needs
Vendors on e-commerce sites are probably faring better than their brick-and-mortar counterparts.
Haters gonna hate: But before anyone starts criticizing Mercado Libre for naturally benefitting these entrepreneurs over others, there are a few (glaringly obvious) things to keep in mind.
First and foremost, remember Mercado Libre is a business (not a charity). And because it’s worked with these vendors, it has a better understanding of these businesses’ payment capabilities.
Bank? What bank?: What’s more, these e-commerce businesses were likely turned away from traditional banks. Heck, they might not even be able to go to a bank because everything is closed. An online loan is definitely more feasible right now.
And lastly, consumer behavior has greatly changed due to Covid-19. So unless there’s a small business out there that’s a producer of hand sanitizer, it’s likely many have seen drops in sales.
One can only hope Mercado Libre offers them fair credit terms.
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