Emergency Credit Access Program (PEAC), the main BNDES measure to mitigate the crisis caused by covid-19 in 2020, had high limits after recent adjustments; the law to make the program permanent has already been passed by the National Congress
RIO – The Small Business Credit Guarantee Program National Bank for Economic and Social Development (BNDES) has already exceeded expectations. In seven months, from August 2022 to the 23rd, the program was approved BRL 22.6 billion in loans granted by dozens of commercial banks, a value that is estimated to be reached only in December of this year. Faced with appetite, confirmed by major commercial banks, the new board of BNDES increased the program’s capacity. Now, the forecast is to guarantee another R$ 20 billion until the end of the year, in a total of BRL 42 billionas the program prepares to become permanent.
Released in full pandemic emergency – the Stadium advance the plans on the measure in April 2020 -, the Emergency Credit Access Program (PEAC) attacked a structural problem in Brazil, the difficulties encountered by small businesses to borrow, due to the lack of collateral, such as real estate, factories or corporate guarantees to be offered to banks. At the height of the pandemic, this could even render other measures to ease financing ineffective, causing what economists call a “credit pool.”
Peac is not a credit line nor does it lend resources from the BNDES. The program attacked the shortage of collateral by making use of a Guarantee fund, the Fundo Garantidor de Investimentos (FGI), which the development bank already managed. The trust funds, or guarantee funds, act as surety insurance for the real estate rental. Based on certain rules, and for a fee, they offer the borrower a guarantee, just as surety insurance allows the tenant to sign the rental contract for the house without a guarantor. If the client of the bank that offered the loan defaults, the guarantee offered by the fund covers the loss of the financial institution. With the guarantee, the bank feels safer to lend, because the risk of default is lower.
In 2020, Peac’s first step was to Capitalization FGI, with a contribution of R$ 20 billion from the National Treasury. In addition, the FGI regulations have been changed, making the granting of guarantees more flexible so that the banks adhering to the program can guarantee a higher loan amount. The first phase, which ended in December 2020, approved BRL 92.1 billion in loans. In the second stage, only opened in August 2022, there were no new contributions. PEAC guaranteed the new loans with a “recycling” of capital by the FGI – as the loan guaranteed until December 2020 is paid by the companies, repaying to the commercial banks, the sums committed to the guarantees are released.
“Mitigating the risks”, the PEAC offers small businesses the possibility of obtaining loans otherwise denied due to lack of guarantees, but the effect on the cost of financing is only indirect, unlike the BNDES credit lines which, under previous PT governments , offered interest below market rates. PEAC charges market interest, defined between banks and their customers, but has a ceiling – in the second stage, it is 1.75% per month, or 21% per year. The problem is that this level of interest squeezes companies financially, inhibiting investment and business growth.
“The account doesn’t close. The cost of growing it, increasing employment, running the machine of the economy, is that much more difficult in front of your business. It should be highly profitable. And if it’s highly profitable, something is going to happen, like new market entrants appear,” he said Raphael Battista de Camargoa member of the Care Club group.
The entrepreneur feels great interest in the day-to-day management of the group, which owns two networks of physiotherapy studios, with the brands care clubfocused on sports medicine and physical preparation for sports practice, e physiotherapistfor physiotherapy and rehabilitation services. Camargo created Club Fisio in 2014. The chain had four units when it merged with Care Club. Together, the chains have 12 units, in São Paulo and Porto Alegre (RS), with approximately 310 employees.
According to Camargo, Club Fisio took out a BRL 50,000 loan in the midst of the pandemic, with an advantageous interest rate of 0.3% per month, but merged with Care Club with the debt paid off. After making major adjustments to address the worst of the covid-19 crisis, Club Fisio has seen demand pick up strongly since the end of 2020. Last year, the group formed by the two chains saw a 30% growth.
But the credit landscape has changed dramatically between the height of the pandemic, the recovery and the present day. Interest rates have moved from historic lows in 2020 to current prohibitive levels. Due to the financial crunch, Camargo said, the group closed a unit of Club Fisio in Jardins, opened another in Jardim Anália Franco, in the east zone, and laid off about 20 employees. All this to cut the company’s 2023 budget “in half”, in the face of higher interest expense. The goal, according to Camargo, is to pay off debts and return to investing with own resources.
“I stop upgrading my machinery, opening new units. My strategy would be to keep rolling over the debt and opening new units, but, instead of opening new units, I want to eliminate this debt,” Camargo said, adding that there it is “high demand” for services.
In the management of the Care Club group, high interest rates, as well as the rapid transition from low to high rates, are a bigger problem than having guarantees to offer to banks. Even so, the largest institutions operating with PEAC, Santander, Bradesque AND Itauinformed the Stadium who see a heated demand for BNDES-backed loans.
“Given the Selic scenario and other indicators, the widening of the values of the guarantees will make it possible to maintain a credit line with differentiated conditions to the advantage of the final consumer,” said the Santanderin note.
OR Itau informed, also in writing, that demand for PEAC loans “remains high”, although, like other credit lines, they are “directly affected by the worst economic scenario”, which may “affect the appetite of financial institutions and the propensity of customers to contract due to higher interest rates in the market”.
“Transactions guaranteed by a guarantee fund have proved to be an excellent credit alternative for companies, as they allow continuity of supply, even in the most adverse economic scenarios”, reads the note from Itaú.
Negative certificate
Christopher Marques Pinto Jr.partner of Turinchain of Italian cuisine restaurants which has three offices in Manaus (AM), would have asked for a loan from Peac to invest in its third home, inaugurated in the middle of last year, in Amazon purchases. However, he has not been able to present any tax exemption certificates.
“For those coming from a crisis of two pandemics, who has updated certificates? For small and medium-sized enterprises, then, it is very complicated”, said Pinto Jr., considering that, despite the difficulties, he has not stopped investing in growth corporate.
A Turin started in 2015, with a store of just 20 square meters, to work only with home deliveries, it opened the first restaurant in 2017 and the second, in 2019, until the business was hit hard by the pandemic, such as the most restaurants in the country.
The origin in the delivery has allowed Pinto Jr. to face the worst of the health crisis. Upon recovery, in the second half of 2020, the entrepreneur resorted to a first-phase loan from PEAC to invest in expansion, but the second wave of the pandemic started earlier in Manaus, Pinto Jr recalled. exit was to use the resources to finance working capital, postponing investments only to 2022.
The entrepreneur sees demand in certain niches, especially those focused on higher income consumers. If conditions were better, he would borrow to expand. “It’s very difficult today. The interest rate is very high. If you take out a loan, it becomes even more complicated,” said Pinto Jr., who opened the third restaurant with the company’s cash and personal resources. “I saw a niche, which had market conditions. I saw that I could enter and I bet all my chips there”, concluded the entrepreneur, underlining that his “business is to undertake” and his “dream is to create places of work”.
Source: Terra
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