30. Mexico

In Mexico, before the pandemic, there were over 4.86 million micro, small, and medium-sized enterprises (SMEs), 96.6% of which were micro-enterprises, which generated 14.6% of national GDP and employed nearly 50% of the workforce.

As a result of the lockdown measures due to the Covid-19 pandemic in 2020, many businesses were forced to interrupt their activities, even closing definitely. Despite the disruption, some business found economic opportunities to reconvert their activities and adapt them to the new circumstances. However, despite some businesses adapting to new consumer behaviour, it was registered a net reduction of 8.06% of the total SME population between May 2019 and September 2020. Currently, with the post-COVID policy measures implemented to reactivate the economy, Mexico has 4.47 million SMEs, of which 94.1% are micro-enterprises. However, establishments born in 2020 have an average of 2 employees, while closed establishments during the same year had an average of 3 people employed.

In 2020, the average interest rates varied according to the loan amount and the size of the borrowing company. For large companies, the average interest rate was approximately 6.26%; for SMEs, it was 11.72%. The average interest rates showed a downward trend related to the expansionary monetary policy stance of the Bank of Mexico, as a measure to mitigate the economic impact of the COVID-19 pandemic. However, from the second half of 2021, the central bank turned its monetary policy stance in the opposite direction and approved several increases of the policy rate to curb inflationary pressures.

In recent years, the Mexican government has developed a range of initiatives to support entrepreneurs and strengthen the SME access to finance. These initiatives have included programmes to promote youth and women’s entrepreneurship. Furthermore, the government has put in place several measures to help SMEs face the economic impact of the COVID-19 pandemic.

Guarantee funds have also been used to develop more specific programmes. For example, government initiatives have been developed to support the provision of credit to companies that previously could not access external finance, such as construction companies, travel agencies, real estate development, rural tourism companies, small taxpayers and government SME providers1. Also, in the midst of the COVID-19 pandemic, the government implemented additional programs to support SMEs in strategic sectors such as retail trade, manufacturing, lodging services, food and beverage preparation, restaurants and the dough and tortilla industry, to contribute to economic reactivation.

Finally, the increase in competition among financial intermediaries has generated a significant improvement in credit conditions, resulting in longer loan maturities and lower interest rate spreads.

SMEs play a strategic role within the Mexican economy, since they are an important source of growth. Information on SMEs is primarily generated through the National Survey of Productivity and Competitiveness for Micro, Small and Medium Enterprises (ENAPROCE), which is conducted by the National Institute of Statistics and Geography (INEGI). In its most recent update (2018), the survey reached 22,188 SMEs from Mexico’s 32 states, which renders it one of the most wide-reaching surveys for SMEs around the world. According to the 2019 survey (with figures for 2018), there are a little bit more than 4.1 million SMEs in Mexico, which altogether account for 99.7% of all private enterprises and 35.6% of national total gross production. More than a half of the SMEs (51.4%) is concentrated in the trade sector, while the 36.1% is concentrated in services, and only a 12.1% belongs to the manufacturing industry.

Less than 10% of SMEs export to the international market, and 80.5% of SMEs exports’ value belongs to the manufacturing sectors, representing a 4.3% of the total value of manufacturing exports. Moreover, only 0.1% of SMEs are direct suppliers for multinational foreign corporations. SMEs participation in international trade has been limited by: 1) the lack of specialized and necessary knowledge and capabilities on entrepreneurship; 2) the lack of knowledge on international trade and markets; 3) non – tariff barriers, regulations and cross-border trade procedures; and 4) the limited access to finance, specially trade finance. The smaller the company is, the more difficult it is for them to participate in international trade. Finally, less than 2% of SMEs invest in innovation which leads to patent or brand registration.

Banks offer different types of financing to SMEs, ranging from simple credit to revolving credit, to commercial credit cards. The demand is higher for simple credit, which represents 67% of the total credit volume for companies. Loan maturities for SMEs credit usually range from 21 to 60 months, and tend to have shorter terms when compared to credit for large enterprises.

However, the portfolio of loans to SMEs granted by commercial banks and other non-financial institution shows a downward trend after reaching a peak in 2016, as reported by the Central Bank. Alongside the negative trends in bank loans to SMEs, many of these economic units still face limited access to credit. From the demand-side, the high interest rates are deemed as the main barrier to access to credit, as reported by more than 20% of the SMEs that did not get a banking credit, according to the Economic Census 2019.

From 2015 onwards, several programs have been introduced by the government to address these problems and promote loans targeting SMEs and strategic segments into them, for instance to young entrepreneurs or women-led SMEs. These initiatives were applied through direct credit programmes or guarantee schemes to financial institutions specialized to serve the SMEs’ demand of funding.

Credit conditions have improved in recent years, as evidenced by lower interest rates, higher loan amounts and more favourable loan terms. In 2020, the decrease of the interest rate was fuelled by the monetary policy of the Central Bank to support the economy against the effect of the COVID-19 pandemic. However, in the second half of 2021 the Central Bank began to approve several increases to the monetary policy rate aiming to contain inflationary pressures, which is expected to make the SMEs credit more expensive in the short term.

Average interest rates generally depend on the size of the borrowing company. For SMEs the average rate at the end of 2020 reached 11.72%, whereas for large companies, the average interest rate at the same period was 6.26%. Both average rates fell from their levels in 2019 in response to the expansionary stance of monetary policy in 2020. The difference between the two fell considerably between 2010 and 2020.

Similarly, the average loan term for SMEs in 2020 was 43.1 months, which is 20 months lower than the average loan term for large enterprises, and 4 months lower than the SMEs average in 2019.

Finally, general credit coverage expanded as new financial institutions were created, thus improving competition and product diversification. These developments were the result of the support provided by the federal resources mainly through the Development Banks.

Within the context of difficult macroeconomic conditions prevailing from 2019 and amplified due to the Covid-19 pandemic, and due to the cyclical nature of the venture capital (VC), the VC fundraising in Mexico shows a decline from 2018 to 2020. According to data collected by the Mexican Private Capital Fund Association (AMEXCAP), registered venture capital raised USD 55 million in 2019, and only USD 12 million as of the third quarter of 2020, which is considerably lower than the amount raised in 2018 (USD 236 million), However, when adding Private Equity Industry Capital Commitments, which include injections made by the Fund of Funds –an investment vehicle managed by state-owned development banks- the total raised amount increases 208% between 2019 and 2020.

In addition, the VC market still reflect some dynamism, as the number of new VC investment vehicles keeps growing, with 14 new funds incorporated between 2019 and 2020, of which 12 (85.7%) are focused on seed and early-stage funding. In addition, the number of registered VC investment vehicles has also been growing dynamically in the last ten years, from 19 VC funds in 2010 to 151 as of the third quarter of 2020. Thus, the number of VC funds represents 25.7% of the total private equity funds, an increased share when compared to the same figure in 2010 (11.2%).

The Programme to foster the Venture Capital Industry aims to foster the creation and to strengthen investment vehicles that pump equity funding to high-impact Mexican start-ups, using the Venture Capital Trust of Nacional Financiera (NAFIN) as the financial intermediary. As of the end of the first semester of 2021, the program promoted 38 investment funds via public or private investments. These funds supplied equity funding to 268 start-ups in 18 economic sectors.

The public policy intervention in the Mexican VC ecosystem has achieved two main goals to date:

  • The first one, by being a co-investment program with private investors, investment vehicles have been created with a commitment of approximately USD 330 million.

  • Second, due to the maturity that the older programs have reached, the VC companies supported by these funds are achieving the expected results beginning divestments with multiple interesting opportunities for the industry.

This programme is currently reaching a point of consolidation that allowed the development of significant concepts for the VC ecosystem: creation of investment funds in the VC stage, co-investment of private entities and government, development of companies with high growth potential and, favourable economic returns for the sector.

The Ministry of Economy has launched various actions aimed at improving the situation of SMEs through two axes: a) access to financing under more favourable conditions than those of the market; and b) the development of training and integration actions and inclusion in the digital economy.

The government, through the Ministry of Economy, launched a program to grant credits to SMEs in 25 thousand Mexican pesos (around 1,200 USD) per loan under preferred conditions, including lower interest rates, and a 3-year term with a grace period up to 3 months. These program specifically targets SMEs that maintain employees on payroll, self-employed and domestic workers, and formal and informal family businesses previously registered in the Welfare Census.

Up to the first half of 2021, under this program there were more than 186 thousand loans allocated on SMEs that maintain their respective staff of employees, while 11.5 thousand loans were granted to self-employed and domestic workers, 1.2 million loans to SMEs registered in the Welfare Census, 22.3 thousand loans to SMEs that meet their fiscal obligations and 13.3 thousand under a modality targeting women-led SMEs.

The Ministry of Economy, through UDP, in alliance with the Fund of Investment and Capitalization for the Rural Sector (FOCIR) and local governments, implemented the Emerging Program for Economic Reactivation, through which loans up to 180 thousand of Mexican pesos (around 900 USS) are granted to formal SMEs affected by the pandemic, under preferred interest rates of 10%, and a 3-year term including the option of a 3-months grace period. This program considers the following activities as a priority: retail trade, manufacturing, lodging services, food and beverage preparation, restaurants, and the dough and tortilla industry. Up to the third quarter of 2021, 720 SMEs were granted loans under this program.

To contribute to economic reactivation, two digital platforms were also created: Mercado Solidario to promote local consumption, allowing the continuity of operation of the various businesses in the context of the pandemic and MIPYMES MX, to make business tools and content available to micro, small and medium-sized companies. of value, events and programs oriented to its strengthening and better participation in the market.


Mexican Association of PE & VC Funds (AMEXCAP) (2021), Information based on AMEXCAP internal data. https://amexcap.com/

Nacional Financiera, NAFIN (2021), Based on internal data of the Venture Capital Area.

National Banking and Securities Commission (CNBV) (2021), Based on data published in: http://portafolioinfo.cnbv.gob.mx/.

National Institute for Statistic, INEGI (2019) Economic Census. Censos Económicos 2019 (inegi.org.mx)

Communiqué No. 056 Government of Mexico announces extension of Regulatory Facilities in the Financial and Housing Sector. https://www.gob.mx/shcp/prensa/comunicado-no-056-gobierno-de-mexico-anuncia-extension-de-facilidades-regulatorias-en-el-sector-financiero-y-de-vivienda

Financial support to micro-enterprises and self-employees. https://www.gob.mx/covid19medidaseconomicas/acciones-y-programas/apoyos-financieros-a-microempresas-y-trabajadores-independientes

Bank of Mexico, Report of basic indicators of credit to small and medium-size enterprises (SMEs). {D50011D6-98BB-1D8A-85C6-C635535A04DE}.pdf (banxico.org.mx)


← 1. Government SME providers are those SME that supply the federal government with goods or services. Small taxpayers are related to the Tax Incorporation Regime (RIF), a new scheme of optional taxation introduced in the Tax Reform approved in 2013 for individuals who perform business activities with income of less than two million pesos per year.

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