Economy

Brazilian private banks start offering credit lines designed to help companies in the pandemic

Together, these lines should allocate almost BRL 36 billion to micro, small and medium companies

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  • Itaú Unibanco, the largest private bank in the country, starts to offer this Thursday credit from the so-called National Support Program for Micro and Small Enterprises (Pronampe);
  • And from July 15, the second credit line that should also start to be offered by private financial institutions is the Emergency Credit Support Program (Peac).

After regulatory adjustments and system changes, Brazilian private banks will offer two lines of credit created by the federal government to help small and medium-sized companies recover from the effects of the COVID-19 pandemic, which were previously concentrated in state-owned banks. These lines are guaranteed by the National Treasury or by funds with participation of the Treasury and managed by state-owned banks.

READ ALSO: Why, even with more than BRL 1 trillion in measures from the Central Bank, credit is not reaching Brazilian companies?

According to the Valor Econômico newspaper, Itaú Unibanco, the largest private bank in the country, starts to offer this Thursday credit from the so-called National Support Program for Micro and Small Enterprises (Pronampe), which intends to allocate BRL 15.9 billion to finance the working capital of micro-companies with annual sales of up to BRL 4.8 million. The state-owned bank Banco do Brasil has already lent BRL 3 billion from this program. Itaú also made an initial agreement to offer the same amount.

READ ALSO: Brazilian government wants to launch a credit line based on card receivables to help companies in the crisis

From July 15, the second credit line that should also start to be offered by private financial institutions is the Emergency Credit Support Program (Peac), with BRL 20 billion for working capital for companies with revenues between BRL 360,000 and BRL 300 million. This line is covered by the Investment Guarantee Fund (FGI), managed by the National Bank for Economic and Social Development (BNDES).

Since the announcement of these credit lines in April, Brazilian companies have been complaining, via entities, that they are not having their loan applications approved. After some changes in the initial proposals, the money seems to be starting to reach those in need. Without working capital, businesses like restaurants and beauty salons will not be able to reopen.

READ ALSO: 83% of small and medium businesses in Latin America suffer with the pandemic

Bank executives told the newspaper, however, that if financial institutions “turn on the credit tap” too quickly, it could raise companies’ indebtedness and weaken the recovery.

Cassio Schmitt, director of Credit Products at Santander, told Valor that this type of credit requires a “systemic” investment. “We are totally interested in offering it, but it will take July to put it on its feet, to start at the beginning of August”, said the executive to the newspaper.