MercadoLibre's financial arm to extend loans to small businesses in Brazil

SAO PAULO, April 15 (Reuters) - MercadoLibre’s financial services arm, Mercado Pago, is extending a 600 million-real ($114 million) credit line to help Brazilian medium and small businesses face the sharp drop in economic activity caused by the new coronavirus crisis.

“We aim to help sellers in our platform, mainly small businesses,” said Pedro de Paula, head of Brazil credit at MercadoLibre, an operator of online marketplaces.

Although large banks have announced they will ease credit conditions for smaller businesses, entrepreneurs say credit lines are shorter and more expensive. A recent survey by small-businesses industry group Sebrae found that 60% of small-business owners were not able to obtain credit since Brazil started shutting down businesses to contain the COVID-19 pandemic.

Tulio Oliveira, chief executive of Mercado Pago, which operates in Brazil, Argentina and Mexico, said many small companies are below the 300,000 reais revenue threshold needed to access the government credit to fund payroll payments.

Oliveira said Mercado Pago and other fintechs are in talks with the government to be able to pay the government’s emergency aid to vulnerable, informal workers, of 600 reais a month. Brazilian state lender Caixa Economica Federal began paying workers last week.

Oliveira said the digital platforms have among their clients many of the most vulnerable workers.

$1 = 5.2449 reais Reporting by Aluisio Alves, Writing by Tatiana Bautzer; Editing by Steve Orlofsky