Feb 2, 2016

• Measures allow refinancing for BNDES PSI operations
• Support for exports and working capital is increased with lower costs?
• MSMEs receive better financing conditions in all the Bank’s credit lines, and the BNDES Card credit term has been increased to 60 months

The Brazilian Development Bank (BNDES) is taking on new measures to improve the financing conditions for Brazil’s production sector, so as to preserve production, jobs and income. 

One focus is to alleviate the cash flow for companies, allowing them to refinance operations using the BNDES Investment Maintenance Program (BNDES PSI) and expanding the term to quit debts in new operations using the BNDES Card.

Other aims include boosting the supply of working capital and increasing exports of capital goods. Financing costs to acquire machinery and equipment on the domestic market have been reduced, to improve the efficiency of the national production system.

The aim of the BNDES is to offer financing conditions that are compatible with the challenges that companies face, but with no subsidies or impact on tax. The new measures represent a potential volume of resources to the tune of R$ 26 billion, which does not affect the BNDES’ for 2016.

Refin PSI – To alleviate the cash flow for companies, automatic operations through the BNDES PSI for machinery and equipment can be refinanced. The cost will be set at 15.73% for companies of all sizes. The potential demand for Refin PSI is in the vicinity of R$ 15 billion.

Operations with up to 12 installments yet to be paid can be refinanced. Renegotiated installments will comprise a new sub-credit loan, which can be paid off in up to 24 monthly installments.

Working capital – To strengthen the cash flow for companies, the BNDES has lowered the financing costs for working capital, through the BNDES Support Program to Strengthen Capacity and Generate Employment and Income (BNDES Progeren).
The lowest rates are for micro and small companies (with gross operating revenue of up to R$ 16 million/p.a.). For this group, the reduction was up to 25%, with interest rates of 11.67% p.a. For medium-sized companies (ROB between R$ 16 million and R$ 90 million/p.a.), the fall was closer to 9%, with interest rates of 14.71% p.a.

The spread for the financial agent, which is charged on these costs, is to be negotiated between the two parties (borrower and agent). Progeren’s available budget is up to R$ 5 billion. These operations will receive support from the BNDES Investment Guarantee Fund (FGI), which increases the possibility of onlending agents granting loans.

BNDES Card – Micro, small and medium-sized companies (MSMEs) also benefitted from the increased loan term for the BNDES Card, from 48 to 60 months. Last year, disbursement to the BNDES Card reached R$ 11.2 billion, with close to 750,000 operations.

Exports – The Bank has reduced the costs for the credit line BNDES Exim Pre-Shipment, earmarked to finance internal production of goods and services that are traded on the international market.

The aim is to provide financing conditions so that national industrial companies take advantage of the favorable exchange rate and expand the exports markets for their products with higher aggregate value. For such, the BNDES is making up to R$ 4 billion available.

The available rates for the Exim Pre-Shipment line were also reduced by around 10% compared to prior rates, while the level of BNDES participation in financing was increased.

The lowest financing costs are for the so-called capital goods with high externalities, that is, with a higher chain value in the country and significant efforts in innovation. For this equipment (which includes highway and farming machinery and apparatuses, energy equipment, tooling machines etc.), the rate the BNDES charges will be 11.62% p.a., plus the spread which is to be negotiated between the final client and the financing agent, with coverage of up to 70% of the export amount.

Rates for other manufactured goods, including other capital goods, aircraft, ships, trucks, buses, auto parts and motors, was set at 13.64% p.a., with 50% coverage.

Guarantees from the BNDES FGI – An important instrument for access to credit through supplementary guarantees for financing operations, MSMEs, Individual Micro Entrepreneurs (MEIs) and freelance truck drivers can use the FGI in their financing operations. The FGI can offer coverage of up to 80% for financing.  The costs will be between 0.8% and 4.9% of the financed amount and may vary in accordance with the loan term and the percentage of guarantee.

Capital Goods – The BNDES has improved financing conditions to acquire energy efficiency equipment. The interest rates for the modality referred to as “BK Efficiency” within the Finame credit lines was reduced from 10% p.a. to 9% p.a. Besides reducing costs, the list of machinery and equipment that are eligible for financing has been increased. For this modality, the BNDES earmarked R$ 2 billion.

This initiative is similar to the measures the BNDES adopted at the end of 2015, improving financing conditions to acquire capital goods via the BNDES Finame credit line.

For these capital goods, including farming equipment, the cost will be up to 9.9% p.a., with the BNDES’ participation at 80%. To acquire buses and trucks, as well as to produce machinery and equipment, the BNDES’ financing cost will be 11.8%. The financial agent’s spread will be charged on these costs, and it is freely negotiated between the onlending institution and the end client, while the financial intermediation fee is  set at 0.1% (for MSMEs) and 0.5% (large companies).