São Paulo – With the objective of providing incentives to competitiveness and job generation by micro, small and medium enterprises (SMEs), the Interamerican Development Bank (IDB) announced today (19) a US$ 3 billion line of credit turned to financing SMEs in the country.
In a press statement, the IDB explains that the conditional credit line for investment projects (CCLIP) and an initial US$ 1 billion loan for this instrument have been approved by board at the bank today.
“IDB assistance, the second of the kind for the country, should include funds for counterparts with the Brazilian Development Bank (BNDES) for a total of US$ 3 billion. The objective is to guarantee a stable flow of funds for the medium and long run to finance investment projects for micro and small companies,” said the IDB.
The BNDES should use an IDB loan and its own funds to finance a program turned to expanding credit for micro and small companies. The funds should provide liquidity for financial institutions to offer credit for these companies to expand, modernize and diversify their production.
Micro companies, businessmen and individuals may receive up to US$ 200,000 dollars in financing from the program, whereas small and medium companies may obtain from US$ 850,000 to US$ 3 million, respectively.
Scarce credit
The micro, small and medium companies, which generate two out of every three jobs in the country, are vital for the economy of Brazil. However, their access to middle and long-term credit on the market, which is traditionally limited due to structural problems, has dropped even further due to the international financial crisis.
This way, the government has intervened to simplify access to credit, with the BNDES. The bank approved 86,000 operations for micro and small companies in 2007 and 122,000 last year, with disbursements of 12.1 billion Brazilian reals (US$ 7 billion) and 17.6 billion reals (US$ 10.3 billion), respectively.
The IDB multicredit line follows in the footsteps of a similar conditional line of credit approved in 2004, to foster this strategy.
The US$ 1 billion loan by the bank, the first of a series of three in the second conditional line of credit, matures in 20 years, with a grace period of four years and interest rates based on the Libor.
*Translated by Mark Ament
