Put Fernanda Lazzarini – 31/03/2020

Last Sunday, March 29, BNDES president Gustavo Montezano announced the following initiatives to combat the effects of the coronavirus pandemic:

• BNDES Emergency Support Program to Combat the Coronavirus Pandemic, with a focus on health; and
• Operationalization of R$1.4 billion in resources to finance companies’ payroll and avoid layoffs.

The Emergency Support Program is a R$1.4 billion line of credit that aims to immediately expand the supply of emergency and intensive care beds, as well as medical materials and equipment. Companies that convert their production into healthcare equipment and supplies will also be eligible. The financing will be contracted directly with BNDES and will require fewer guarantees, in addition to the possibility of financing R$1,001.3 billion of the total value of the operation, with a grace period of 24 months and a total term of up to 60 months.

The Emergency Operationalization of Payrolls will cover small and medium-sized companies exclusively for the payment of employee salaries through accredited banks, under the supervision of the Central Bank. The resources to be borrowed are limited to up to 2 minimum wages per employee (R$2,090.00), with the remainder, if any, being paid by the company's cashier. Among the facilitated conditions of the new line are the charging of the fixed fee of 3.75% per year (exempt from spread bank), a six-month grace period for charging interest and a 30-month grace period for payment. In addition, the company may not fire its employees, whose salary payments are financed, during the two months of the program.

Furthermore, the National Monetary Council (“CMN”) granted exclusive authorization to BNDES to transfer resources to fintechs authorized as Direct Credit Companies (SCDs) as a way of increasing competition in the banking market and thus facilitating the arrival of money to those who need it.

The initiatives now announced are a continuation of the first measures already taken by BNDES, such as the temporary suspension of payments of financing installments (standstill) for direct clients and indirect operations of the Bank and the expansion of transparency and information about the financial agents that offer the BNDES Pequenas Empresas line in different regions and company sizes, as well as informing the costs of each of these agents.

Measures such as those presented above may reduce the negative impact caused by the shutdown imposed on several sectors due to COVID-19. We are monitoring the measures announced by the government and are available to assist our clients in finding options that benefit their businesses.