34. Peru

In 2022, Peru's economy grew by 2.7%, primarily driven by private consumption, leading to the expansion of the commerce and services sectors. However, the country faced challenges such as increased financing costs, inflation, and social unrest. Looking ahead to 2023, SMEs and entrepreneurs are projected to encounter similar challenges. The business environment could be further complicated by both social conflicts and climate-related issues.

SMEs play a major role in the Peruvian economy, contributing to over 30% of value added and approximately 7% to exports. They have a particularly strong presence in sectors such as commerce, services, and manufacturing. Regarding the business landscape, SMEs comprise 99.4% of all enterprises and contribute significantly to employment, accounting for 90.5% of private employment. This highlights the importance of supporting their growth as they are considered drivers for the development of the economy in Peru.

SMEs accounted for a significant share of all outstanding loans in 2022, reaching 30.9%, driven by an 8.9% increase in the number of formal enterprises accessing the formal financial system. Between 2010-2019, the share of all outstanding loans was around 25% on average, percentage that experiment a positive increasing of 7 pp. Thus, since 2020, the share on average was 32%. It should be noted that there was also observed growth in the number of SMEs, expanding at an average annual rate of 12.3%, going from 1,780 thousand companies in 2020 to 2,246 thousand companies in 2022.

While banks remained the primary lenders, alternative financing options such as factoring and invoice discounting gained some attention, although fluctuations have been observed in their usage in recent years. Moreover, over-indebtedness is a concern as the majority of SMEs rely on a single institution, and small business loans face higher interest rates, posing affordability challenges.

In 2022, the interest rate spread between large companies and SMEs in Peru was 19.9 percentage points. It is important to note that the interest rates for small business loans experienced an increase from 24.0% in December 2021 to 27.1% in December 2022. Therefore, this upward trend suggests that despite the narrowing spread, the cost of borrowing for these enterprises has increased.

The government of Peru has implemented several programmes to address financing constraints and support businesses during the COVID-19 pandemic. These programmes include Reactiva Perú, FAE-Mype, PAE-Mype, FAE-Agro, FAE-Turismo, Programa de Garantías COVID-19, and FAE-TEXCO. These initiatives aim to provide favourable financing conditions and ensure the continuity of resilient businesses across sectors.

In 2022, economic activity in the country recorded a growth rate of 2.7% driven by the dynamism of private consumption, which was reflected in the expansion of the commerce and services sectors. However, the country also faced challenges such as increased financing costs, high inflation, and social unrest. These factors had a negative impact on enterprises across the board, with smaller businesses being particularly affected. In 2023, SMEs in Peru are facing similar challenges in the macroeconomic environment. The projected growth for the end of 2023 is 2.6% which relies heavily on private consumption as a driver of economic output. However, social conflicts in sectors like mining and tourism, as well as climate-related issues affecting agriculture and fisheries, can further complicate the business environment. Additionally, although inflation is expected to remain at around 3.0%, it will continue to impose cost pressures on businesses. The monetary policy rate is anticipated to remain at 7.75% in the near term, which could potentially lead to higher interest rates.

Against this backdrop, SMEs in Peru face significant challenges in accessing affordable financing, managing increased costs, and navigating volatile financial markets. Potential upward pressures on the exchange rate, capital outflows, and heightened political uncertainty could further add to the complexity of the SME operating environment.

SMEs play a crucial role in Peru's economy, both in terms of their sheer number and their contributions to various aspects of economic development. In 2022, SMEs accounted for 99.4% of all enterprises in the country. The total number of SMEs reached 2,245,795, with the majority being micro-firms (94.2%), followed by small firms (5.0%) and medium firms (0.2%). While the sector experienced a growth rate of 6.0% in 2022 compared to the previous year, it remained below pre-pandemic levels in 2019 (-5.5%).

In terms of employment, SMEs in Peru had a significant impact; they generated nearly 10.7 million jobs in 2022, which accounted for 90.5% of total private employment. This amount was 2.9% higher than the previous year and a substantial 6% more compared to 2019. Moreover, micro-firms had the highest share of employment (74.4%), followed by small firms (13.7%) and medium firms (2.4%).

The contribution of SMEs to the Peruvian economy is substantial, accounting for more than 30% of the added value. Out of the total number of companies, small firms have the largest share of added value(15%), followed by medium firms (10.7%) and micro firms (5.5%). In terms of exports, SMEs play a significant role, accounting for approximately 7.0% of the total value of Peruvian exports, particularly notable in sectors such as mining, agriculture, and textiles.

According to the Finance and Banking Regulator Authority, SMEs accounted for a significant share of all outstanding loans in 2022, reaching 30.9%. During 2020, this percentage experimented a large increase that continued growing by 2021. Before COVID pandemic begins the higher share of SME outstanding loans was reported in 2012, when its share represented around 28%. This indicates the importance of SME lending in the overall credit market and highlights the role of SMEs in driving economic growth and development.

The increase in SMEs' share of outstanding loans is a positive sign, as it demonstrates better access to financing for them. Proactive initiatives aimed to support businesses have led to an increase in the number of formal enterprises accessing the formal financial system.

Banks are the primary source of loans for companies, although micro-firms tend to rely less on them, as shown in Figure 35.3. Bank credits are primarily concentrated in Lima, the capital city, and other major cities across the country. In smaller cities and peripheral areas, urban credit unions are the predominant credit providers. While banks remain the main financing source for small, medium, and large firms, urban credit unions play a significant role for micro-firms, accounting for 40.7% of their financing. Credit unions and specialized institutions catering to SMEs often offer quicker loan processing and greater accessibility to individuals and entrepreneurs.

SMEs are often considered riskier by the formal financial sector, primarily due to their lack of expertise and skills. Approximately 38.3% of SMEs have loans from a single financial institution, while 29.9% have loans from two lenders, which can include banks and other types of institutions. Only 5.2% of SMEs have loans from more than five financial institutions. This concentration of loans from a large number of institutions could indicate potential over-indebtedness in the SME sector. These firms may have borrowed more than their actual turnover, leading to challenges in repayment.

In 2022, the interest rate spread between large companies and SMEs in Peru was 19.9 percentage points. This represented a decrease of 0.4 percentage points compared to the previous year, indicating a slight improvement in interest rate differentials. However, it is important to note that the interest rates for small business loans experienced an increase during the same period. Specifically, they increased from 24.0% in December 2021 to 27.1% in December 2022. Therefore, this upward trend suggests that despite the reduction of the spread, the cost of borrowing for these enterprises has increased.

Therefore, while the narrowing interest rate spread indicates some improvement in the accessibility of credit for SMEs compared to large companies, the increase in interest rates for small business loans highlights the challenges faced by SMEs in borrowing funds at affordable rates.

In recent years, there has been a rapid increase in the utilization of alternative financing sources for SMEs. One of these sources is factoring and invoice discounting activities, which have gained popularity. However, it is important to note that these financing alternatives can be volatile, as fluctuations have been observed in their usage each year. This volatility is influenced by factors both on the supply and demand side.

In order to promote the use of factoring, since 2020 the government has encouraged private firms to accept invoices for factoring. Now, sellers have the option to use their invoices as collateral for factoring with financial institutions. In previous years, this practice was not common, as large buyer firms often declined to accept invoices for factoring, citing high operating expenses associated with the process.

Despite the government's promotion of factoring and invoice discounting activities, the volumes of leasing and hire purchases continue to surpass them. As of December 2022, factoring and invoice discounting for SMEs reached PEN 605 million, which is approximately PEN 158 million less than in 2021. In contrast, leasing and hire purchases amounted to PEN 1,604 million during the same period, a decrease of approximately PEN 608 million compared to 2021.

Non-performing loans tend to be common in the SME sector due to the great relative uncertainty they face in their activities. Considering that SMEs are less resilient than larger companies, it is more likely that during any period of slow economic growth, they will suffer from lower sales and lower demand, which in turn directly affect their capacity for loan repayment. Larger firms, on the contrary, are more exposed to global demand and commodity prices, therefore, they are less vulnerable to internal market shocks.

As part of the economic recovery process and in response to the negative effects of the COVID-19 pandemic, the government has implemented various programmes to provide favourable financing conditions for companies across all sectors, ensuring resilient businesses in the economy. The programmes include:

  • REACTIVA PERÚ: This programme aims to support the payment of workers and suppliers by providing state-guaranteed loans to companies, ensuring the continuity of the payment chain and addressing the economic impact of COVID-19.

  • FAE-MYPE: is a state fund that promotes working capital financing for micro and small enterprises across all sectors of the economy.

  • PAE-MYPE: The Business Support Programme for micro and small enterprises aims to provide financing for working capital and fixed assets to the most affected MSMEs by COVID-19.

  • FAE-AGRO: This programme supports small producers in the agricultural sector, specifically the Family Agriculture1, by providing financing to ensure the success of national agricultural campaigns.

  • FAE-TURISMO: A fund created to provide short-term financing to micro, small, and medium enterprises in the tourism sector, helping them to cope with the economic effects of COVID-19.

  • Programa de Garantías COVID-19: This programme aimed to guarantee reprogrammed loans for consumer, personal, housing mortgage, vehicle, and MSMEs loans for individuals whose repayment capacity has been affected by the pandemic.

  • FAE-TEXCO: A programme created by the Ministry of Production to stimulate the economic recovery of micro and small enterprises in the textile and clothing sector.

These programmes have played a crucial role in providing financial support and assisting businesses in overcoming the challenges presented by the pandemic. The government's initiatives aimed at addressing financing constraints have been instrumental in sustaining the economy and promoting recovery.

There is evidence that MSMEs that accessed to financing programmes increased their survival probability, number of formal employees and sells comparing to those that didn´t access. MSMEs with financing increased their survival probability in 5.2 pp and their annual sales in 12.5 UIT2 (around USD$13,000).


Central Reserve Bank of Peru (2023). INFLATION REPORT. March 2023.

Ministry of Production (2022). Las MIPYME en cifras 2021. Obtenido de: http://ogeiee.produce.gob.pe/index.php/shortcode/oee-documentos-publicaciones/publicaciones-anuales

SME and entrepreneurs: Consider micro-enterprises as an indicator of entrepreneurship. From now on, the term SMEs is used to refer to both micro, small, and medium-sized enterprises.


← 1. Family Agriculture is an organizational model where family labour predominates.

← 2. UIT: Unidad Impositiva Tributaria (Tax Unit)

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