Brazil: Individual entrepreneurs will have microcredit of up to US$595

RIO DE JANEIRO, BRAZIL – Individual microentrepreneurs (MEIs) and informal workers will have access to a new type of microcredit launched on March 17 by the Brazilian federal government. The Digital Microcredit for Entrepreneurs – SIM Digital program is included in the Provisional Measure (MP) signed by President Jair Bolsonaro during a ceremony at the Planalto Palace. Created by the Ministry of Labor and Social Security, the initiative may reach about 4.5 million workers, including individuals and MEIs.

The credit will be up to R$1,000 (US$198) for individuals and up to R$3,000 (US$595) for legal entities (MEIs). In the case of individuals, the interest rate will be 1.95% per month, and the loan can be divided into 24 installments. The credit for the MEI will bear an interest of 1.99% per month, also with repayment in up to 24 installments. Only legal entities with productive activity with annual gross revenue of up to R$360,000 can participate.

According to the president of Caixa Econômica Federal, Pedro Guimarães, the new modality will be available from March 28. Individuals can hire the loan directly through the Caixa Tem application. The state-owned bank will be the main financial agent of the Digital SIM.

In the case of MEIs, initially, the loan contract can only be made at Caixa branches in person. The expectation is that the credit can be contracted digitally later.

According to the government, the program has no fiscal impact. It will use R$3 billion in resources from the Guarantee Fund for Length of Service (FGTS) to purchase shares of the Microfinance Guarantee Fund (FGM) to mitigate the risks of operations. The new modality is aimed at people with no credit history and who, for this reason, have difficulty obtaining financing from conventional banks and financial institutions.

With information from Agência Brasil