Small and medium-sized businesses will receive help to pay for employees’ salary during the new coronavirus pandemic. The aid will come through a R $ 40 billion credit line to finance, under favorable conditions, the payroll for the next two months. The measure should guarantee remuneration of up to two minimum wages per employee (R $ 2,090) and, according to the government, will benefit 1.4 million companies and 12.2 million workers. However, it will only take effect in about two weeks, after the publication of a provisional measure.
The package was announced yesterday at Palcio do Planalto by President Jair Bolsonaro and presidents of official banks. Small and medium-sized companies are responsible for more than 50% of the country’s formal jobs, but have been severely impacted by the economic slowdown caused by the coronavirus.
The president of the Central Bank (BC), Roberto Campos Neto explained that the emergency credit line will be destined exclusively to companies that earn between R $ 360 thousand and R $ 10 million per year. The financing will have a six-month grace period and an additional 30-month payment period.
The cost will be 3.75% per year, equal to the basic interest rate (Selic). “Payroll represents 45% of the cost of these companies. So, we are relieving 45% of their cost, at a much lower rate than they would normally have ”, said the BC president, recalling that banks usually charge above 20% per year for these customers.
Funding, however, will be limited to two minimum wages per worker. “Whoever earns a minimum wage, will earn a minimum wage. Whoever earns two minimum wages will win two minimum wages. Whoever wins three will win two. If you win five, you will also win two. Complementing this is a company decision, ”said Campos Neto. He pointed out that the company is not obliged to reduce the remuneration of employees to two minimum wages and can therefore afford the remaining amount, which will not be financed.
Campos Neto assured that the line brings guarantees for the worker, such as the maintenance of jobs. “It will be in the contract that these companies cannot fire these employees for two months,” he said. “And the money goes straight into the employee’s account. It doesn’t go through the company, which is left with the debt, ”he explained.
The R $ 40 billion of the credit line will be divided into two monthly transfers of R $ 20 billion. The National Treasury bears R $ 34 billion and private banks with R $ 6 billion. “The BNDES will take 80% of the resources from the Treasury and pass them on to private banks, which will put the other 15%,” said the president of the development bank, Gustavo Montezano.
He also pointed out that the banks will be responsible for granting the credit. Interested companies should therefore seek the financial institution they have a relationship with in order to have access to resources.
Despite the special conditions announced by the government, banks will be able to use their own credit models and policies. The BC confirmed that there is at least one eligibility criterion: good payment history in the past six months. But he guaranteed that he will keep an eye on the operationalization of the line to ensure that all companies that fit these conditions have access to resources.
For the measure to work in practice, the government needs to issue a provisional measure to open an extraordinary credit of R $ 34 billion in the budget for two months, in addition to creating a fund operated by the BNDES, supervised by the Central Bank, to receive contributions from the Treasury . “We are finalizing the details. But we think it is important to announce it soon, because there was a great expectation in relation to the jobs in these companies ”, explained Campos Neto.
What: emergency financing for small and medium-sized companies to pay employees’ wages for two months
12.2 million employees from 1.4 million companies
R $ 40 billion (R $ 20 billion per month), R $ 34 billion from the National Treasury and R $ 6 billion from banks
Who has the right
Companies with revenues of R $ 360 thousand to R $ 10 million per year
How much will you finance
Up to two minimum wages per worker
30 months, after a 6-month grace period
Basic interest rate of 3.75% per year
Guarantees for the worker
The company is obliged to maintain employment during the two months of financing. The money goes straight into the worker’s account