Resolution CMN No. 4838 - Governs Credit Operations under the Working Capital Program for Business Preservation

The Central Bank of Brazil, in accordance with Article 9 of Law No. 4,595 of December 31, 1964, makes public that the National Monetary Council, in an extraordinary session held on July 20, 2020, based on Articles 4, item VI, of the aforementioned Law, and Article 2, paragraph 3, of Provisional Measure No. 992 of July 16, 2020,

R E S O L V E S:

Article 1. This Resolution governs the conditions, deadlines, rules for granting, and characteristics of credit operations contracted under the Working Capital Program for Business Preservation (CGPE) by financial institutions and other institutions authorized to operate by the Central Bank of Brazil, excluding credit cooperatives and consortium administrators.

Article 2. Credit operations under the CGPE must be contracted by December 31, 2020, and must observe the following requirements:

I - exclusive destination for financing working capital;

II - minimum term of thirty-six months; and

III - minimum grace period of six months for the start of principal payments.

Article 3. The lending institution is prohibited from establishing any kind of limitation on the free disposal by borrowers of the values contracted under the CGPE, especially:

I - the retention of values for the payment, total or partial, of pre-existing debts; and

II - the inclusion of clauses that direct values for the payment, total or partial, of pre-existing debts.

Article 4. The institutions referred to in Article 1 must observe, regarding operations contracted under the CGPE, the following distribution in relation to the destination of the total contracted value:

I - at least 50% (fifty percent) of the total contracted value destined to companies with gross revenue below R$100,000,000.00 (one hundred million reais);

II - at most 20% (twenty percent) of the total contracted value destined to companies with gross revenue between R$100,000,000.00 (one hundred million reais) and R$300,000,000.00 (three hundred million reais); and

III - at most 30% (thirty percent) of the total contracted value destined to operations that fall simultaneously within the scope of the CGPE and one of the following programs:

a) National Program for Support to Microenterprises and Small Businesses; or

b) Emergency Program for Employment Support.

Paragraph 1. The gross revenue mentioned in items I and II shall be calculated on an annual basis, considering the months the company was in operation during the calendar year 2019.

Paragraph 2. Credit operations cannot be considered simultaneously in more than one of the percentage limits provided in the main text.

Paragraph 3. Verification of compliance with the provisions of the main text will be carried out at the end of the validity period of the CGPE based on information contained in the Credit Information System (SCR), considering operations contracted by December 31, 2020, that:

I - are part of the active portfolio of the lending institution; and

II - have been indicated by the lending institution as operations contracted under the CGPE.

Paragraph 4. For the purposes of the main text, operations acquired from financial institutions and other institutions authorized by the Central Bank of Brazil may be considered as operations contracted under the CGPE, provided that the conditions established in this Resolution are met.

Paragraph 5. Operations contracted under the CGPE that have been assigned during their validity period cannot be used by the assignors or endorsers for the purposes of the main text, regardless of the date the transaction occurred or the eventual retention of a portion of the credit risk.

Article 5. The Central Bank of Brazil may issue the necessary norms for compliance with the provisions of this Resolution.

Article 6. This Resolution enters into force on the date of its publication.

Roberto de Oliveira Campos Neto President of the Central Bank of Brazil