By Jay Forte, Contributing Reporter
RIO DE JANEIRO, BRAZIL – The Conselho Deliberativo do Fundo de Amparo ao Trabalhador (CODEFAT, Deliberative Council of the Worker Support Fund) approved yesterday (May 9th) the creation of a $5 billion line of credit to finance working capital for micro and small businesses. The new credit line will be available to micro and small companies with annual gross revenues of up to R$3.6 million.
Called the “PROGER Urbano – Capital de Giro” (Urban PROGER – Working Capital) is comprised of R$2 billion from the Worker Support Fund (FAT) and R$3 billion National Bank for Economic and Social Development (BNDES), according to the Ministry of Labor and Social Security.
The financing limit with funds from FAT special deposits is R$200,000 per company, with payment of up to 48 months, with twelve months grace period and financeable limit of one hundred percent. The interest on financing, operated by the Bank of Brazil, will be established by the Long-Term Interest Rate (TJLP), plus up to twelve percent per year.
The financing with BNDES funds however, operated by public banks must be paid in 36 months, including a grace period of up to six months, with an interest rate set by the TJLP plus 9.6 percent per year.
Brazil has about nine million micro and small enterprises, which account for approximately 52 percent of formal jobs and over a quarter of gross domestic product (GDP). The estimate of the Ministry of Labour and Social Security is that 100,000 businesses to use the new line.
CODEFAT also ratified on Monday the creation of the Credit FAT Culture Line, directed by the music segment. The line will offer R$100 million for working capital and investments in micro and small companies with annual gross revenues of up to R$3.6 million and individual micro entrepreneurs from the music industry.