Believe it or not…. just ask small businesses!

Small and medium size companies in Brazil are starting to feel the effects of the European crisis. According to Estadao newspaper, businessmen and bankers are saying that the cost of financing for companies of this size has risen in recent weeks. It is a scenario similar to 2008, but in smaller intensity.

The Federation of Industries of São Paulo (Fiesp) is concerned. They said “we run a serious risk that, as in 2008, many companies lay off employees at the beginning of next year, after vacation.”

A banker who asked not to be identified shows some figures to illustrate the size of the problem. He said that one month ago a small business would pay on average 28% in yearly interests for a line of credit, and today it costs 32%! In the case of a medium sized company, the cost rose from an average of 20% to 23% per year, also according to the banker.

A few days days ago, the Anefac Association released a survey that confirms the trend. According to the survey, the average interest rate for the corporate sector went from 58.08% a year in October to 59.92% per year in November.  

Our point: Despite the reduction in the basic interest rate (Selic), loans are getting more expensive in Brazil.
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