IDB APPROVES $750 MILLION CREDIT TO PROVIDE ACCESS TO FINANCING FOR MORE THAN 4,900 MSME IN BRAZIL THROUGH A NEW BNDES DIGITAL CHANNEL.

The Inter-American Development Bank has approved a $750 million line of credit aimed at boosting the productivity of more than 4,900 micro, small and medium-sized enterprises (MSME) in Brazil. They will be able to access new credit sources through digital channels, thus contributing to economic growth and job creation.

The Brazilian Development Bank (BNDES), which will contribute $150 million of its own resources, will be in charge of executing the loan, channeling financing through lines of credit that the companies will be able to tap into.

Eligible beneficiaries will be MSMEs with proven administrative, technical, financial, legal and environmental skills in the execution of loans.

This IDB program is designed to support BNDES efforts to increase competition in the marketplace and facilitate digital access to the lines of credit that this plan features.

The program will support the recently implemented “MSME Developer Channel” (Canal do Desenvolvedor MPME), a BNDES product that offers clients a single platform to facilitate access to information about its products and the accredited financial institutions that offer them, and also automates some procedures related to the presentation of requests for credit.

The program will also support BNDES’ efforts to integrate Fintech solutions into its MSME channel, including issues such as analysis of credit ratings, financial education, linkage (of applicants to financial institutions) and reverse auctions. These solutions aim to improve MSME access to BNDES financing.

These companies make a sizeable contribution to Brazil's economic output and job creation. And while they account for 99.4% of all businesses in Brazil, they contribute only 54% to the country's formal employment and 43% of all wages and salaries. One of the main challenges facing MSMEs is access to public and private sector credit, in part due to problems such as lack of credit history or proper collateral, or expertise in devising a financial statement. 

This is the second transaction under a conditional line of credit of S2.4 billion that was approved by the IDB in December 2016.

The IDB financing is over 25 years, with a grace period of five-and-a-half years and an interest rate pegged to the Libor.