Brazilian MSMEs face export barriers and rising credit delinquency

Micro, small, and medium-sized enterprises (MSMEs) in Brazil face significant hurdles in internationalization and credit stability. Despite representing the vast majority of Brazilian businesses, MSMEs account for only 0.8% of the country's total export value. This stands in stark contrast to nations like China, Italy, Spain, and the United States, where MSME participation in exports ranges from 45% to 60%. Key obstacles for Brazilian small businesses include high logistics costs, the need for international certifications, and limited access to specialized export credit.

Simultaneously, MSMEs are struggling with rising debt levels. A study by Safegold reveals that these businesses are responsible for nearly 90% of the total overdue credit in the sector, totaling R$ 75.6 billion out of R$ 85.1 billion in credit overdue by more than 90 days. The MSME delinquency rate reached 5.71%, significantly higher than the 0.66% seen in large corporations.

Part of this spike is attributed to a recent regulatory change by the Central Bank (Resolution CMN No. 4,966). The new rule requires banks to use an “expected loss” methodology rather than an “incurred loss” model, forcing institutions to provision for potential future risks earlier. This accounting shift has contributed to a reported increase in delinquency figures within the financial system.