BNDES launches credit program to aid Brazil’s ethanol producers

By Erin Voegele | June 10, 2020

The Brazilian Development Bank (BNDES) on June 4 announced the launch of a credit program designed to help support the country’s ethanol industry, which is being negatively impacted by falling fuel demand resulting from the COVID-19 pandemic.

Facilities that take advantage of the BNDES Support Program for the Sugar and Alcohol Sector are able to secure working capital by using sugarcane and ethanol stocks as collateral. BNDES said it has allocated R$1.5 billion ($301.59 million) to the program. For each loan, a commercial bank must provide at least the same amount of funds as BNDES. As a result, the program is expected to leverage R$3 million.

The payment term is up to two years with a grace period of up to 12 months. As an incentive to preserve jobs, companies that receive the loans are not allowed to reduce their permanent staff for two months. Companies that maintain or increase jobs over the next 12 months are expected to have a portion of the repayment forgiven.

Additional information is available on the BNDES website.