By Mayela Armas
CARACAS (Reuters) - Venezuelan business owners struggling to get access to credit amid their country's continued economic crisis are seeking loans through foreign banks, business people and finance industry sources told Reuters.
Local banks in the South American country offer few loans to the private sector because of efforts by Nicolas Maduro's government to lower inflation by increasing the supply of foreign cash, limiting the expansion of credit, reducing public spending and raising taxes.
Large companies in need of financing have begun seeking loans from foreign banks with local partners or connections, private sector and finance sources said. The loans have market-rate interest rates and a high collateral threshold, they said.
Under law, local banks must retain 73% of their deposits in the central bank, which leaves little margin for loans.
"Industries have to seek options to maintain their operations," said one businessman, adding that because loans are costly due to interest and guarantees, only large companies can seek them. "Small and medium businesses can't carry them."
Several companies seeking credit are from the agricultural sector and need the funds to purchase wheat, fertilizers and other goods from abroad, three sources said.
Other businesses looking for loans are focused on export of food and drink, they added.
Neither the central bank nor the banking regulator responded to requests for comment.
U.S. sanctions imposed in 2019 are focused on limiting Maduro's access to financing and do not prohibit private Venezuelan companies from operating abroad.
Loans being sought in other countries by large Venezuelan companies are generally for more than $500,000, two of the sources said, asking that the names of the companies and the banks remain confidential for security reasons.
"The government transfers the biggest burden of its adjustment plan to the private sector by restricting credit for companies and consumer credit, which partly affects households," said economist Daniel Cadenas.
Venezuelan banks' credit portfolios total some $583 million, according to official figures from July, but economic analysts say financing needs for companies are 10 times that and the breathing room offered by loosened currency controls has not led to full economic recovery.
"Banking has become more transactional, rather than giving credit," said a finance source.