Government institutes facilitated credit system for micro-enterprises

President Jair Bolsonaro signed a decree establishing the National Credit Guarantee System, with the objective of facilitating the access of micro and small businesses to simplified credit. The measure was published today (26) in the Official Gazette of the Union and takes effect immediately.

Under the new system, loan guarantees may be provided by other institutions, a kind of “guarantor”. Authorized entities are: joint-guarantee companies and counter-guarantee companies; credit unions; public or private funds; and any institution whose bylaws or articles of association provide for the granting of guarantees in credit operations.

“Thus, for example, a group of companies can join together and set up a credit union and guarantee the operations that are contracted by their members”, explained the General Secretariat of the Presidency, in a note.

Funds already in operation will also be able to participate in the new system, such as Banco do Brasil’s Operations Guarantee Fund (FGO), which guarantees credits under the National Program for Support to Micro and Small Businesses (Pronampe) , and the Investment Guarantee Fund (FGI), of the National Bank for Economic and Social Development (BNDES). However, according to the decree, the institution of this system does not imply an additional contribution of resources from the National Treasury in the granting of guarantees in credit operations, except as provided for in the budget law.

The new guarantee system integrates the National Financial System. In order to encourage operations in the new modality, the regulatory bodies of the financial system will be responsible for establishing more flexible conditions in loans for this segment of the market. In turn, the National Monetary Council (CMN) must regulate the acceptance and provision of guarantees by financial institutions, establishing prudential and supervisory criteria.

“The creation of this new system has the potential to stimulate banking competition, market efficiency and provide greater access to credit, in addition to contributing to the recovery of the economy”, says the note, noting that micro and small companies account for about 72% of formal jobs in the country.

According to the general secretary, despite the contribution to the generation of vacancies, these companies have difficulties in accessing the traditional credit system, as they are unable to provide the guarantees normally required in these operations. “For this reason, they end up being passed over by financial institutions, which may prefer to lend their resources to companies with greater size and equity”, he added.

Within 180 days, entities authorized to operate under the new system must make available in their sites information on the origin of the funds that back the guarantees issued and the aggregate balances of guaranteed and active credit operations.