Put Leonardo Neri and Barbara Oliveira  – 27/03/2020

There are many impacts worldwide due to COVID-19, or the novel coronavirus. The disease that originated in China and has already affected dozens of countries was declared a pandemic by the World Health Organization (WHO) on March 11, 2020 and, since then, has had a major impact on the global economy.

In Brazil, the first case of the disease was confirmed on February 25, 2020, when the government began to pay more attention to the issue. Initially, it was thought to be a case of local transmission of the disease, i.e., it was only detected in people returning from countries that were already infected. With the subsequent declaration of the pandemic and the increase in confirmed cases in the country, the government began to take measures to reduce the risk of community transmission.

States that have already confirmed cases have created contingency plans for the disease, with guidance that it is necessary to reduce the circulation of people in public places, avoid places with large crowds and adopt more intense hygiene measures. In recent days, some states have declared a state of public calamity, adopting restrictive measures to contain the spread of the disease. Among the measures adopted in the so-called quarantine, the closure of “non-essential” businesses, such as shopping malls, street shops, bars and restaurants, was determined, limiting the operation of these establishments to online shopping only, in addition to guidance for teleworking to activities that allow it.

The measures aim to prevent people from moving around the city, significantly reducing the risk of contagion of the disease. However, the drastic forced reduction in consumption has caused major economic impacts, especially on informal and self-employed workers, as well as micro and small businesses, which have had their businesses closed for an indefinite period and lost their sources of income, which will consequently lead to increased debt.

In this sense, aiming at the temporary reduction of costs for this most affected group, there has been much questioning about the possibility of reviewing payment conditions or postponing due dates, especially for contracts signed with banking institutions, which, as is known, have high late payment charges and, if not paid on time, can reach unpayable amounts.

To avoid an even greater economic impact with the increase in debt of millions of Brazilians, the banks Bradesco, Banco do Brasil, Caixa Econômica Federal, Itaú and Santander propose to extend the debts of individuals and micro and small companies for up to 60 (sixty) days, subject to compliance with certain requirements.

It is important to note that, as a rule, the measure does not apply to credit card and overdraft debts, and is only valid for all credit agreements signed directly between the customer and the bank, which includes financing and loan agreements. However, as a differential, some banks are adopting independent measures, offering customers the extension of other contracts as well. Furthermore, it is necessary for the customer to be up to date with their contractual obligations to be entitled to the extension, which may also be waived as a differential by the institution.

For information on other requirements, the office is available to provide clarifications. Each institution will define its own deadlines and new conditions for debt repayment, depending on the specifics of each contract negotiated.

The measure will support families during the quarantine period, allowing the use of financial resources in essential products and services, in addition to helping micro and small businesses maintain their cash flow, so that they can support the period in which they are closed or have a drastic reduction in demand, thus avoiding mass layoffs and bankruptcies, which would have repercussions throughout the economic consumption chain.