The Conselho Deliberativo do Fundo de Amparo ao Trabalhador (CODEFAT, translated as Deliberative Council of the Worker Support Fund), a unit of the Brazilian government, recently announced a line of credit totalling BRL 5 billion (approximately USD 1.4 billion) to be made available as working capital for companies earning annual gross revenues of up to BRL 3.6 million (approximately USD 1 million).
The credit line, referred to as PROGER Urbano – Capital de Giro (translated as Urban PROGER – Working Capital) comprises BRL 2 billion (approximately USD 555 million) from the Worker Support Fund (FAT), a government fund underwriting unemployment insurance and programmes for job training, education and employment placement services, and BRL 3 billion (approximately USD 833 million) from the National Bank for Economic and Social Development (BNDES), which is responsible for the expansion of industry and infrastructure in Brazil.
The funds from FAT allow for loans up to BRL 200,000 (approximately USD 56,000) per company, repayment terms up to 48 months plus a 12-month grace period and an interest rate up to 12 percent per year above the long-term interest rate known as TJLP, which is set by the Bank of Brazil. The credit terms for funds from BNDES allow repayment terms of 36 months, including a grace period of up to six months, with an interest rate set at TJLP plus 9.6 percent per year.
By Imke Herholdt, Research Associate
Sources and Additional Resources
[1] The Rio Times: Brazil Announces R$5B Credit for Small and Micro Business
[2] NACLA: Worker President Raises Workers’ Hopes in Brazil
[3] MicroCapital Universe Profile: Brazilian Development Bank (BNDES)
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