Brazil’s federal program for emergency corporate credit has been considered a flop. In order to attract more companies to enroll in the initiative, the government will extend the program for an extra two months and lift some of the requirements, namely firms’ obligation to preserve all of its jobs.
Now, companies will be able to access credit and still lay off up to 50 percent of their workforce. The annual revenue limit to enter the program was pushed up from BRL 10 million to 50 million (USD 9.4 million).
The loans under the emergency program are 85-percent backed by state-owned banks, with private institutions providing 15 percent of the credit. Annual interest rates sit at 3.75 percent with a grace period of six months until the first repayment.
When announcing the proposed changes to Congress, Central Bank Chairman Roberto Campos Neto said that companies which had to fire workers have already done so — and that the aim now is to save these firms from bankruptcy.
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