High interest rates are the biggest obstacle to accessing credit – 06/06/2023 – Market

The high level of interest rates is the main obstacle for companies to gain access to short or medium term credit, points out research by CNI (National Confederation of Industry).

According to the Special Survey Conditions for Access to Credit carried out by the confederation, 71% of the consulted companies indicated the level of interest rates as the biggest obstacle to gaining access to credit.

President Luiz Inácio Lula da Silva has repeatedly criticized the BC (Central Bank) for maintaining the basic interest rate (Selic) at the level of 13.75% per year, where it has been since August 2022.

For the June meeting of the Copom (Monetary Policy Committee), the majority market expectation indicates the maintenance of interest rates at the current level, with some easing from the third quarter.

The CNI survey also indicated that, for 25% of businessmen in the industry, the requirements of real guarantees also emerge as one of the biggest obstacles when seeking financing in the market. Another 16% of those interviewed pointed out the lack of adequate lines for the company’s needs.

The CNI survey heard from 2,022 businessmen between March 1st and March 9th about credit conditions over a six-month period, between September 2022 and February 2023.

Data from the confederation of industries also show that around 20% of companies that sought access to short and medium-term credit lines over the last few months did not get approval from creditors. The percentage rises even more, to 37%, when the demand was for long-term lines.

“The problem doesn’t stop there. Even when the company gets the credit, it encounters difficulties”, says Fábio Guerra, economic policy manager at the CNI.

According to him, for approximately one third of the companies that obtain financing, the credit renewal conditions were worse, considering aspects such as the interest charged, the number of installments and the guarantees required.

Guerra adds that 20% of companies were unable to obtain credit in the desired volume. Data show that this difficulty affected small (29%) and medium-sized companies (26%) more than large ones (17%).

“This is very negative because they end up not being able to carry out the desired projects, and often have to resort to their own resources, which is generally less efficient”, says the specialist.

Data from the CNI survey also indicate that, for 60% of the companies that sought credit, the funds were allocated to working capital, such as paying suppliers, employee expenses and the acquisition of raw materials.

For 21% of the companies, the search for financing was aimed at making new investments, whether in machinery and equipment, installations or research and development.

According to the industrial companies interviewed by the survey, the most mentioned alternative to circumvent the credit problem, with about 30% of the responses, was the reduction of tax and administrative costs on credit, such as the IOF (Financial Operations Tax) .

The expansion of public lines of credit (25%) and the simplification of requirements imposed by financial institutions (21%) also appeared among the main ways to facilitate access to financing.

“Improving the conditions for offering guarantees by companies is a very important agenda, which has been worked on and should be intensified. In this sense, improvements to two programs created in the pandemic and which deserve to be strengthened, Pronampe (National Program Support for Micro and Small Businesses) and the PEAC (Emergency Program for Access to Credit).