BNDES Extends Credit Line For Small And Medium Sized Companies

With a focus on working capital financing, BNDES Credito Pequenas Empresas is operated indirectly. Companies close loans with commercial banks from the development bank’s transferring network.

The National Bank for Economic Development (BNDES) announced on Saturday morning, 4, the extension of the BNDES Credit Small Business line until December 31, with an expanded budget of over R $ 5 billion.

The budget of BNDES Credito Pequenas Empresas had already been increased by R $ 5 billion, even in March, in the first set of measures of the development bank to mitigate the crisis caused by the COVID-19 pandemic. The new expansion was decided after the R $ 5 billion from the March expansion was fully contracted.

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According to the BNDES, since March, 16,318 operations with 15,094 companies have been approved, employing 372,800 people. “The average loan value per operation was around R $ 318 thousand. The main economic sector covered was commerce and services , with 79.7% of resources, followed by the manufacturing industry (19.5%) , agribusiness (0.7%) and extractive industry (0.1%) “, says the note, released this Saturday by the BNDES.

With a focus on working capital financing, BNDES Credito Pequenas Empresas is operated indirectly. Companies close loans with commercial banks from the development bank’s transferring network. In this specific line, 31 financial agents are operating throughout the country.

BNDES Credito Pequenas Empresas already existed before the pandemic crisis. In January, it had previously undergone an extension. It started accepting credit requests from companies with annual sales of up to R $ 90 million – until last year, the limit was much lower, at R $ 4.8 million. In January, the maximum amount of loans increased from R $ 500 thousand to R $ 10 million every 12 months.

In March, already in the context of facing the crisis, it started to take orders from corporations with yearly sales of up to R $300 million. The development bank also increased the maximum amount of loans from R $10 million to R $70 million every 12 months. The increase in this limit accompanies the increase in the maximum revenue that the company must have to be eligible for financing – the larger the size of the company, the higher its need for working capital.

On the other hand, financing conditions did not change in March, as there had already been a slight reduction in interest rates in early February, also before the pandemic. When BNDES Credito Pequenas Empresas loans were launched in March 2019, they had a maximum of five years, with a grace period of up to two years.

The BNDES spread (which enters the final interest rate account) was 1.45% per year in the original design but was reduced to 1.25% as of February 3 this year. In other words, all these conditions (maximum term of five years, with a grace period of up to two years, and a spread of 1.25% per year) were already in effect before the March expansion to face the crisis.

In announcing the new expansion of BNDES Credito Pequenas Empresas on Saturday, the bank did not report changes in loan conditions. The note, the funding institution points out that “interest rates vary, as they are negotiated between the company and the financial agent.” The average final interest charged to companies of all suitable sizes on the line is 11.23% per year, according to the BNDES website.

“The objective of the line in this second stage remains the same: to offer resources for the free use of companies, in a simple and agile way, through partner financial agents (credit cooperatives and commercial banks, public or private),” says the note from the bank.

Alex Marshall
My responsibilities include interacting with the Board of Directors, data entry, accounts payable, payroll, grant report entry, managing the organization's HR, helping and creating organizational and program budgets in collaboration with the ED and Program Direct, and other misc. tasks.

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