Micro and small companies are those that frequently ask for bank loans especially during the first five years of business. In Brazil getting a company loan is extremely difficult, which is one of the reasons why over 50% of businesses close within 5 years after opening. Here we will understand more about BNDES, Caixa and Banco do Nordeste which are the main banks in Brazil that offer special credit lines for companies.
The requirements for obtaining credit varies according to the bank. However, the fundamental requirement is that the business owner doesn’t have any previous bad credit listed with the credit protection bodies such as the Credit Protection Service, known as SPC and Serasa.
There are many possibilities and variables that go into getting a company loan. Criteria such as the size of the business, disposable income and type of credit you want to obtain are factors that diversify the process. Among the major Brazilian financial institutions that grant loans to companies are BNDES, Caixa Econômica Federal and Banco do Nordeste.
BNDES, the National Bank for Economic and Social Development, is a federal public institution that works as a long term financing instrument for investments in various economic sectors. In order to incentivize businesses in Brazil, the bank invests in the creation and expansion of companies in the country. Of the 100 largest companies in Brazil BNDES financed 91, which represents 78% of the investments of the bank.
BNDES also acts as an intermediary between the company and other banks, as many financial institutions offer BNDES products and services exclusively for companies interested in certain types of loan.
There are some types of company loans offered by BNDES, covering funding of production and acquisition of new machinery and equipment and procurement of goods and inputs. There is also the microcredit, which grants small loan amounts to formal and informal micro companies, usually without access to the traditional financial system. Another special type of loan is BNDES Finem, aimed to finance projects with a value equal or greater than BRL 20 million.
BNDES Exim is a loan for the production of goods and services exportation. This loan is also intended to support the marketing of goods and national services abroad. In addition, to support commercialization of Brazilian goods abroad, through credit line opening in foreign financial institutions.
Caixa Econômica Federal
Caixa Econômica Federal, or CEF, is a 100% public company that prioritises sectors such as housing, basic sanitation, infrastructure and services, but also supports cultural, educational and sports activities. CEF is responsible for government programs such as the Service Time Guarantee Fund, known as FGTS, and the Social Integration Program, known as PIS. In addition, this bank supports governmental social programs, like the Bolsa Familia, FIES and Minha Casa Minha Vida.
The PROGER Investgiro is an exclusive line of credit for companies with annual revenue of up to BRL 7.5 million and aimed towards the financing of fixed investment projects, with working capital associated or not. The funding limit is up to BRL 600 000 and the payment term is up to 60 months, including a grace period of up to 12 months.
Microcredit Caixa is a way of obtaining faster credit and intended for formal or informal small business owners or independent professionals. The minimum loan amount is BRL 300 and the maximum is BRL 15 thousand according to the need and the size of the business. The payment period is from 4 to 24 months. CEF offers 5 other types of credit services for working capital and for the maintenance of operational activities of small businesses.
There are two lines of credit offered for Caixa’s client companies, which are Conta Garantida Caixa and Giro Caixa. Both are intended to meet working capital needs. The payment term varies according to the size of the company, as well as the credit limit. Crédito Especial Caixa Empresa is a line of credit for companies which are not Caixa’s account holders. The financing resources can be used, for example, to balance the cash flow in an emergency or pay suppliers.
If the company is already a Caixa client and has an annual revenue of up to BRL 50 million they can use a special credit line Giro Caixa Fácil. The credit is up to BRL 1 million, to use as the company wish. This option is available as pre-approved credit for a transaction account and the period for payment is up to 40 months.
Banco do Nordeste
The Northeast Bank of Brazil, known the Banco do Nordeste do Brasil, is the largest regional development bank in Latin America and a public bank engaged in promoting sustainable development. The bank offers a range of distributed credit lines in the main market sectors, in special agro-industrial, commerce and service, infrastructure, industrial, rural, technology and tourism. Each of these sectors have specific funding programs depending on the activity.
The Bank grants micro and small companies a set of credit lines for working capital, according to the company’s needs. Giro Insumos is intended to finance inputs, supplies and inventory building. The maximum amount of credit available for micro companies is up to BRL 240 000 and for small businesses up to BRL 2 million. The payment term is 24 months including a 3 month grace period.
The credit line MPE Capital de Giro is intended to supply the resources company for various payments. The value of the credit is from BRL 1 thousand and the period for payment is up to 1080 days. The last credit line offered to micro and small companies is the Giro MPE 13°, which aims to cover early payment of the 13th salary. The credit available is up to 100% of the payroll and the payment term is up to 12 months.