Brazil proposes increasing microcredit limits for entrepreneurs

The Brazilian government, under President Luiz Inácio Lula da Silva, has proposed increasing the microcredit limit for individual borrowers from R$ 21,000 to R$ 30,000 per financial institution. The proposal, detailed in a technical note from the Ministry of Labor and Employment, also suggests raising the total indebtedness limit within the financial system from R$ 80,000 to R$ 120,000, excluding housing credit.

The initiative pertains to the National Program of Oriented Productive Microcredit, which serves formal entrepreneurs, such as individual micro-entrepreneurs (MEIs), and informal workers seeking small loans. These credit lines offer lower interest rates than standard market rates, as financial institutions are required to allocate a portion of their demand deposits to this modality.

The Ministry of Labor argues that the current limits, set in 2019, have become insufficient due to a significant loss of purchasing power and rising costs for inputs and equipment. The proposal has been forwarded to the Ministry of Finance and awaits evaluation and approval from the National Monetary Council (CMN).