Peru to offer flood-hit businesses soft loans

Peru's government will offer soft loans to about 20,000 small businesses and microenterprises affected by flooding, a senior official said.

The country was hit this year by the so-called coastal El Niño weather phenomenon. Heavy rains led to deaths and widespread damage to homes, businesses and infrastructure.

Affected enterprises based in the country's northern coastal region will be offered loans for use as working capital or to purchase capital goods, government-run newspaper El Peruano reported.

Vice minister for small enterprises and produce Juan Carlos Mathews said that the initial recipients are part of a wider group of 190,000 enterprises affected either directly or indirectly by the climate phenomenon. But not all of the 190,000 will be able to access the loans, he added.

The government is due to meet this week to work on corresponding regulations and expects to have them ready within 21 days.

Mathews said the annual interest rate for the sol-denominated soft loans could initially fall by as much as 13 points to 17%, depending on the applicant's credit history. He added they could fall further.

The average annual interest rate on sol-denominated loans issued by municipal credit unions to microenterprises is 42.9%, El Peruano reported, citing financial services regulator SBS data. The rate for small businesses is 32.4%.

Peru is due to start rebuilding infrastructure destroyed by the flooding this year without waiting for a final report on the damage, a senior government official has said.

Rain-swollen rivers and landslides left 115 dead and 180,000 homeless, causing over US$3bn in damage to water and power plants, schools, hospitals, housing, bridges, railways and roads, according to the central bank. President Pedro Pablo Kuczynski has said the government may have to invest as much as US$9bn to rebuild infrastructure and relocate affected communities.