Staggered loans: A flexible modality of long-term financing for SMEs in global health emergencies

Salvador Cruz Rambaud; Joaquín López Pascual; Emilio M. Santandreu; Salvador Cruz Rambaud; Joaquín López Pascual; Emilio M. Santandreu

doi:10.3934/QFE.2022024

Quantitative Finance and Economics

2022, Volume 6, Issue 4: 553-569. doi: 10.3934/QFE.2022024

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Research article

Staggered loans: A flexible modality of long-term financing for SMEs in global health emergencies

1.
Departamento de Economía y Empresa, Universidad de Almería, 04120 Almería, Spain
2.
Departamento de Economía de la Empresa, Universidad Rey Juan Carlos, 28032 Vicálvaro (Madrid), Spain
3.
OUR Microlending LLC, Miami, FL 33134, USA

Received: 09 September 2022 Revised: 17 November 2022 Accepted: 21 November 2022 Published: 28 November 2022
JEL Codes: G21, G32

Context: The context of this paper is the unprecedented global situation which has been and is still experiencing all countries all over the world, due to the pandemic caused by Covid-19 and its variants. Apart from the important problem of health population, all countries are facing a sharp reduction in their main economic indicators: stock indices, GDP (Gross Domestic Product), rates of employment, closing down of businesses, etc. Results: In this paper, we have presented and mathematically analyzed the so-called staggered loans as a useful tool for SMEs to be applied after times of crisis. Moreover, their pros and cons, and the advantages for lenders and borrowers have been highlighted. Specifically, this kind of loan can help solve the problem of the scarce offer of credit due to monetary politics currently addressed to reduce inflation. Policy implications: Taking into account that this economic situation cannot continue for longtime, many countries are thinking about the next stages of the way-out from the crisis in all sectors of affected economies. Purpose: In this research, we seek to provide some information on the characteristics of the so-called staggered loans and the repayment system applied by some microfinance institutions in Latin America. This can help SMEs to obtain the liquidity necessary to reopen and develop their activity. Methods: Methodologically, we have presented risk-based measures able to guarantee the profitability of lenders and control the solvency of lenders and borrowers.
- staggered loan,
- economic crisis,
- SMEs,
- COVID-19,
- solvency,
- risk,
- Krugman curve
Citation: Salvador Cruz Rambaud, Joaquín López Pascual, Emilio M. Santandreu. Staggered loans: A flexible modality of long-term financing for SMEs in global health emergencies[J]. Quantitative Finance and Economics, 2022, 6(4): 553-569. doi: 10.3934/QFE.2022024

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Abstract

Context: The context of this paper is the unprecedented global situation which has been and is still experiencing all countries all over the world, due to the pandemic caused by Covid-19 and its variants. Apart from the important problem of health population, all countries are facing a sharp reduction in their main economic indicators: stock indices, GDP (Gross Domestic Product), rates of employment, closing down of businesses, etc. Results: In this paper, we have presented and mathematically analyzed the so-called staggered loans as a useful tool for SMEs to be applied after times of crisis. Moreover, their pros and cons, and the advantages for lenders and borrowers have been highlighted. Specifically, this kind of loan can help solve the problem of the scarce offer of credit due to monetary politics currently addressed to reduce inflation. Policy implications: Taking into account that this economic situation cannot continue for longtime, many countries are thinking about the next stages of the way-out from the crisis in all sectors of affected economies. Purpose: In this research, we seek to provide some information on the characteristics of the so-called staggered loans and the repayment system applied by some microfinance institutions in Latin America. This can help SMEs to obtain the liquidity necessary to reopen and develop their activity. Methods: Methodologically, we have presented risk-based measures able to guarantee the profitability of lenders and control the solvency of lenders and borrowers.

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