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Companies to be source of working capital for small businesses

. Jun 17, 2020
Companies to be source of working capital for small businesses Photo: Wilson Lima/ABr

Brazil’s National Development Bank (BNDES) will provide a special BRL 2 billion (USD 380.45 million) credit line for companies willing to supply working capital to their suppliers and clients, Economy Ministry Special Adviser Guilherme Domingos told finance newspaper Valor.

The measure was created to address a gap in credit supply to small vendors and businesses not currently benefitted by most loan programs. The system will then lend to “anchor” companies, whose clients and suppliers’ survival will benefit their own business; thus, aligning the company’s needs and interests with BNDES’ attempt to save small and medium enterprises.

Companies will be able to borrow up to BRL 200 million to be paid over 60 months with minimum interest rates at 1.4-1.6 percent a year. They will then have to redistribute part of these financial resources under the same original rates and conditions as to not have any significant gains in the process. This process will serve as a supplementary credit line to the government’s current Small and Micro Businesses Support Program (Pronampe).

The program has the potential to aid many small businesses that, as reported by The Brazilian Report, are still struggling to generate enough working capital despite the slow reopening of the Brazilian economy.

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Rafael Lima

Rafael is a Communication student at Wake Forest University, and a student fellow of the Pulitzer Center on Crisis Reporting.

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