Tales of Resistance: Small Loans and Big Businesses

VA columnist Jessica Dos Santos reflects on a banking system that is very much tilted in favor of larger companies.

It’s been a while since we heard of homebuying loans in Venezuela. Credit to buy cars, so ubiquitous at some point, are also a thing of the past.

Not just that, credit cards have also been long gone because the constant currency devaluations might have left the limits at the price of a candy bar. Banks did not have it easy either, because devaluation for a while was way higher than interest rates, meaning they never got their money back.

Though this is not a primary necessity issue, it affects a lot of people in Venezuela. Under Chávez, there was a massive drive to have people open bank accounts and eventually get credit cards or loans with relative ease. Wages were also rising all the time.

In my case, I managed to save enough for a downpayment and get a loan to buy a car shortly after graduating from university and working for a state company.

One thing I remember vividly was a TV broadcast where Chávez openly criticized the banks’ credit policies, specifically targeting the managers of what was then the recently nationalized Bank of Venezuela:

“If I need a vehicle, imagine I’m a recently graduated doctor and I need to go to the emergency room frequently. Or maybe I got married and have a family. I go to the bank, the car costs 62 thousand bolívares, but to get a loan I need to put down the first 20 percent. And if I don’t have it, then I don’t get it. Why is that? If I’m coming to you [the bank] for help, why do you put a wall in front of me for me to jump? Is this socialist banking? The same thing happens with housing. Working class people who live off their wages, how will they put together the 20 percent downpayment? They need to get two loans, one for the 20% and the other for the rest. From each according to his ability, to each according to his needs.”

I’m not sure if this wonderful vision is possible, or even sustainable, for state-owned banks. I also don’t know how Chávez would judge everything that has gone on in recent years, how he would split responsibilities between sanctions and mistakes, who he would send before the moral firing squad.

But I’m not a fortune teller. The point is that a few weeks ago, the Maduro government announced it was reactivating its credit policies towards small businesses and entrepreneurs. For the past five years, I have had a small business doing all sorts of things, so I paid special attention to this news.

During the announcement, it all sounded as simple as “go to the nearest bank and get it.” However, that bubble burst very soon after I arrived. The clerk summed it up quite clearly:

“These programs are not for small businesses, they are for big and established companies that declare significant revenues and can demonstrate an ability to pay back the loan and interests withing a fairly tight window, maybe as short as 12 months.”

“So they are loans for people who don’t really need loans. It’d be fun to be Lorenzo Mendoza [owner of food conglomerate Polar],” I said. She smiled politely and tried to boost my hopes. “Maybe try with the entrepreneur loan options. Go to our main headquarters and ask about that.”

I went there and the first thing I was told was that before getting any credit I would need to go through a training program where I would be taught – among other things – how to manage the money I would get. You know, the old capitalist adage that poor people just squander money.

Then, I would need to register as an entrepreneur, bring my most recent tax returns, provide bank account status and a few more things. So far so good, though quite a bureaucratic pathway. But when we got to the amounts, my hopes took a punch to the gut.

These loans offered a grand total between 100 and 1700 dollars. No offense, but what is one supposed to do with $100 in present-day Venezuela besides buying groceries for a couple of weeks?

For example, a couple of months ago my brother and I gave my mother a sewing machine. A fairly basic one, with limited capabilities in terms of fabric thickness and stitch density. It cost $280. So a program like this wouldn’t even be of use for a single seamstress.

Along the same lines, a few days ago I looked up the costs for renting a stand in a holiday fair to be held outside a giant shopping mall in Caracas. The answer: $450 for the tiniest of spaces for two days.

It’s quite clear that the playing field is tilted. What service are public banks offering? Are they just going to be run like private ones? We’ve gone from Chávez’s “give the people what they need” to a level of economic inequality and exclusion that seems worse than before Chávez.

The official discourse often features “entrepreneurs” as key new actors in the economy. We can agree with that or not. But the truth is that all the economic instruments, from credit to direct government support, are geared almost exclusively towards big businesses. It’s yet another contradiction that requires quite a bit of popular debate.

Jessica Dos Santos is a Venezuelan university professor, journalist and writer whose work has appeared in outlets such as RT, Épale CCS magazine and Investig’Action. She is the author of the book “Caracas en Alpargatas” (2018). She’s won the Aníbal Nazoa Journalism Prize in 2014 and received honorable mentions in the Simón Bolívar National Journalism prize in 2016 and 2018.

The views expressed in this article are the author’s own and do not necessarily reflect those of the Venezuelanalysis editorial staff.

Translated by Venezuelanalysis.