News

The Pandemic caused by COVID-19 caused its first effects in Honduras in March 2020, where as a nation we had to face the first confinement, to avoid its propagation. The confinement included everything from schools and workplaces to churches and businesses. Mipymes (MSMEs: micro, small and medium enterprises) have been one of the sectors most affected by the total closure and progressive reopening of their businesses, and are the generators of more than 70% of jobs in Honduras.

In response to the large losses suffered by the Mipyme sector, the Government of the Republic and the Honduran Association of Banking Institutions (AHIBA), have signed an agreement whose main purpose is to support this productive sector, through the restructuring of business loans and credit cards, as well as with interest rate reductions. These benefits may be received through the financial institution that has currently supported them with the loans, as long as the debtors have maintained risk categories I and II. Among the benefits that these entrepreneurs and businessmen can enjoy are the reduction of up to 2% of the interest rate, the elimination of the collection of delinquent interest, and the non-capitalization of interest. Likewise, applicants may request the freezing of the risk category at the Credit Information Center, which will be maintained until December 31, 2020, in the risk category it had on February 29 of this year.

With the implementation of financial relief agreements for the most vulnerable sectors during the pandemic, it is expected that all those micro, small and medium businesses that could not reopen and continue contributing to the movement of the national economy, because they hold debts with the national financial sector, can have an economic respite and allocate these resources to the maintenance of their businesses.  Entrepreneurs should go to their financial institution in order to apply for these benefits before the end of the year, since they will subsequently have access to new credit facilities, in conjunction with the Honduran Bank for Production and Housing (BANHPROVI).

The financial relief and the agreed measures have as main objective to avoid the bankruptcy and closure of one of the most productive sectors in the national economy, as well as to avoid the unemployment of more than 500,000 employees in the country. It is important to consider that the relief mechanisms not only benefit the employer, but also all those workers who due to the national health emergency had been suspended or dismissed from their jobs, allowing them to return to their jobs and contribute to the support of their families.  As the months go by, we see more and more businesses returning to normal and trying to keep their companies afloat, and thanks to the support of the banks, an economic reactivation becomes possible.

Astrid Villeda Hersperger
Associate
García & Bodán
Honduras