Oct 14, 2020

 The Brazilian Development Bank (BNDES) approved, last week, the possibility of temporarily suspending payments of loans contracted with the Bank by companies from specific sectors of the economy and microentrepreneurs in microcredit operations, as well as states and municipalities that have automatic operations contracted with the Bank through partner financial institutions. Seeking to promote economic relief to businesses most affected by the crisis caused by the pandemic, the total amount of the suspended payments may exceed R$ 2 billion. 

The measure is an update of the standstill (name given to the suspension of payments in the market) already conducted by BNDES this year, which suspended R$ 12.4 billion in payments, benefiting 29,000 companies where almost 2 million people work. This first action also benefited 56 public entities (states and municipalities) that had their funding payments suspended in the amount of R$ 3.9 billion. 

The new measure will allow the suspension of loan payments both in transactions contracted directly with BNDES and indirect ones conducted via accredited financial institutions. For this standstill round, public sector clients who have automatic indirect operations with BNDES will be able to request the suspension of amortization and interest payments that would be made between October and December 2020. Microentrepreneurs who have operations of BNDES Microcredit will be allowed to suspend their payments for six months. 

Companies that have direct or indirect nonautomatic operations will also be able to suspend payments for six months. The following sectors of the economy are eligible: sports, recreation and leisure facilities; audiovisual; editing; hotels; manufacturing of parts and accessories for motor vehicles; assembly of ships and floating structures; transportation, railway transportation; airports; navigational support; fabric and artifacts for clothes and shoe-making; manufacture of clothing accessories; printing and reproduction of recordings; manufacture of furniture and various manufacturing industries; and the trade of other goods in specialized stores. The choice for these segments was based on the list of sectors most impacted by the Covid-19 pandemic prepared by the Ministry of Economy, on the analysis of the most recent data of the variation in the collection of sectors and on BNDES’ sectoral analysis.

Companies eligible for the benefit may apply for it until November 30, 2020. In direct operations, the request for suspension must be forwarded to BNDES. For indirect transactions, the interruption should be negotiated with the financial agent that granted the financing. The full term of the credit will be maintained and there will be no incidence of late interest during the suspension period. 

About BNDES – Founded in 1952 and currently linked to the Ministry of Economy, BNDES is the main instrument of the Federal Government to promote long-term investments in the Brazilian economy. Its actions focus on socioenvironmental and economic impacts in Brazil. BNDES offers special conditions for micro-, small- and medium-sized enterprises, as well as social investment lines, directed at education and health, family agriculture, sanitation and urban transport.  In crisis situations, BNDES acts in an anticyclical manner and assists in formulating solutions for resuming economic growth.