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By comparison, Mexican banks offer small business loans at 22 to 30 percent.

“Right now, it’s a little less than 2000 pesos [about $187] per month,” Covarrubias says of his payment, “but it’ll go down each month.”

Verenice Villanueva Ponce, a 52-year-old single mom who lives in the Presidentes section of east Tijuana, received a 15,000-peso loan (about $1400) in January to start a perfume retail business out of her house. “My payment is 1400 pesos [about $130] a month, but it will be about 100 pesos [about $9.30] less each month.”

Villanueva and Covarrubias are among the conscientious loan recipients who are actually repaying their loans. “Right now, we have 2.5 million pesos [about $233,000] of loans that aren’t being repaid,” Fletes says. “Some of that is owed by people who made some payments and then stopped. The rest is people who never paid. We have legal proceedings pending on these cases. Because when we loaned them the money, they signed a note saying they’d repay. Legally, we have three years to collect on that note. The problem with that is, in many cases, in order to be paid, we might have to repossess their businesses or their merchandise or their houses. We would legally have to go over there and do it. We would be the villain in the movie if we did that. It wouldn’t look good for the municipal government, so the administration does not want to get involved in that.”

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