High interest rates in Brazil impede access to credit for 71% of businesses, reveals survey

A study by Brazil’s National Confederation of Industry (CNI) indicates that high-interest rates pose a major obstacle for 71% of companies seeking short or medium-term credit.

Since August 2022, the Selic rate has been fixed at 13.75%, becoming a point of contention between the government’s economic team and the Central Bank (BC).

Another quarter (25%) of the companies surveyed expressed that the requirements for tangible collateral from banks are their primary hurdle to securing financing.

Meanwhile, 16% voiced dissatisfaction over the lack of credit lines that suit their company’s needs.

The survey, conducted between March 1st and 9th, gathered responses from 2,022 business owners regarding credit conditions from September 2022 to February 2023. Here is the full survey (1 MB).

Based on the CNI’s “Special Survey on Access to Credit” (“Sondagem Especial Condições de Acesso ao Crédito”), 47% of companies were unable to renew their short or medium-term financing, 28% took out new credit lines, and only 6% failed to secure new financing.

Among the companies that sought credit, 60% intended to use it for payments to suppliers, operational expenses, and raw material purchases.

Another 21% aimed to invest in innovation or developing new products.

The survey suggests that working capital is the primary aim of short and medium-term operations for 60% of businesses.

For long-term operations, it ties with investments in machinery or equipment, each cited by 28% of the respondents.

For 30% of the business owners interviewed, reducing tax and administrative expenses, such as the Tax on Financial Operations (IOF), is the key to overcoming difficulties in accessing credit.

Other suggested measures to facilitate business access to credit include expanding public credit lines and simplifying the requirements set by banks.

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