Government may increase new Pronampe guarantee to keep banks’ interest

The Jair Bolsonaro (PL) government is still studying the maximum percentage of default coverage of the new Pronampe (National Support Program for Micro and Small Businesses). The maximum limit may increase from 20% to 30% depending on the speed of borrowing and the interest of banks. The start of operations is scheduled to take place by July 31.

The government understands that, with the inclusion of loans for MEIs (individual microentrepreneurs), it may be necessary to recalibrate the coverage ceiling and expects to have a clearer perspective of the scenario in two or three months after the start of operations. The trend, however, is to keep the 20% guarantee, according to government sources.

In the new phase of Pronampe, if the 20% of the amount covered by the guarantee fund is maintained, the government expects to leverage up to R$65 billion in new loans.

However, the line will be operated at a time of rising interest rates and rising defaults, which may trigger greater caution on the part of banks. Therefore, the government could end up raising the guarantee coverage rate to 30% – which would, as a consequence, end up reducing the total volume of new financing.

Pronampe was created in 2020 to support micro and small businesses affected by the new coronavirus pandemic. Initially temporary, the program became permanent and became one of the Bolsonaro government’s bets to stimulate the economy. In the new phase, it started to include the MEIs (Individual Microentrepreneurs).

The crisis caused by the Covid-19 pandemic pushed many Brazilians towards entrepreneurship and, since then, the number of MEIs continues to grow. The modality is responsible for 57.4% of active businesses in Brazil, in addition to representing 79% of companies listed in the first four months of this year.

In Pronampe, banks offer credit to entrepreneurs under better conditions, with lower interest rates and requiring fewer guarantees and counterparties. In the new program, the maximum annual interest rate will be equal to the Selic rate (currently at 13.25% per year), plus 6%.

The renewal of Pronampe is part of a new credit program aimed at small businesses, called Crédito Brasil Empreendedor, which promises to inject around R$ 87 billion in financing by 2024. It also includes the PEAC (Emergency Program for Access to Credit).

MEIs, micro, small and medium-sized companies with revenues of up to R$ 300 million a year will be able to access the line. In the case of Peac, the average interest rate charged by banks will be 1.75% per month (21% per year).

In Peac, warranty levels vary depending on the size of the company. A maximum limit of 30% was stipulated for coverage of default for MEIS and micro companies, 10% for small companies and 7% for medium-sized companies. The government expects the program to also start operating by the end of July.