The Brazilian Bank for Economic and Social Development (BNDES) is considering to provide financing for small and medium-seized businesses through fintechs‘ investment funds, according to Valor.
It’s one of the ideas being worked out in the BNDES ‘aid package to help those affected by the coronavirus crisis. According to the media outlet, BNDES’ aid via fintechs is estimated in BRL 5 billion. It’s also on the table: direct loans to fintechs and the use of these companies as resource lenders.
Valor reported that the BNDES has conversations about participating with, at least, BRL 100 million in credit rights investment funds (FIDCs), under the condition that part of the quotas will be acquired by the fintech itself or market investors. The discussions indicate an 80% share of the development bank.
However, according to Valor, the Brazilian Development Bank is resistant to exposing itself to subordinated quotas, which are the first to suffer default. People with knowledge told the media outlet that the BNDES is not willing to suffer alone with the first impacts of default and there is a regulatory capital challenge for banks to invest in subordinated instruments because they require a larger capital reserve, which makes the investment economically unfeasible.