Business credit

Brazil is trying to cut red tape on a $4.7 billion small business credit program

The federal government published on Monday an interim decree facilitating access to credit for small and very small businesses. The bill, sent to Congress for analysis, aims to use the BRL 23 billion ($4.7 billion) currently allocated to two unused federal funds. Lawmakers have up to 120 days to review and approve the executive order or it will expire.

The target of the program are small and very small Brazilian companies, which employ 62% of the Brazilian workforce and represent 27% of the country’s GDP. President Jair Bolsonaro has taken several measures to meet the needs of the business class, including a recent reduction in taxes on manufactured goods.

The credit program comes after the service sector posted a monthly contraction of 0.2% in February.

As was the case with the manufactured goods tax cut and another proposal to increase the salaries of federal civil servants by 5%, the executive order left several sectors feeling short of changes – even those for which the measure was meant to benefit. The retail segment judged the BRL 23 billion total as “insufficient” to ensure the sector can regain its pre-pandemic position.

“As the amount initially discussed was BRL 100 billion ($20.5 billion), we believe that small and very small businesses deserve more attention, especially while they recover from the disastrous effects of the pandemic.” , wrote an association of chambers of commerce. “The amount of money, below expectations, caused some frustration.”