The financial system has already provided assistance for over ARS140,000 million to more than 90,000 MSMEs—with ARS21,761 more in the course of disbursement–through subsidized loans stipulated by the BCRA.
From the beginning of the preventive and compulsory social isolation established by the National Government, credit offer has been increasing and is expected to reach about ARS220,000 million.
During the second half of April, the amounts disbursed climbed from ARS60,000 to nearly ARS140,000 million. Likewise, approvals escalated from ARS86,000 to ARS166,000 million. This means that, by the end of April, 75% of credit was approved.
Subsidized loans are not meant to be non-refundable. Indeed, MSMEs are required to submit information in order to comply with the regulation in force. This requirement has led to some delays in the process of approval.
FOGAR has provided financial institutions with guarantees for ARS92,000 million in support of the subsidized credit line. So far, local institutions have disbursed ARS8,100 million; institutions under the umbrella of ABAPPRA, ARS6,300 million; and foreign institutions, ARS11,400 million.
In addition to a decrease in the interest rate to 24%, the financing cost to all MSMEs that can now have access to different traditional credit lines dropped about 50 p.p., to 35% on average.
The credit line subsidized at a 24% interest rate has mainly been used to cash checks issued before the lockdown, thus reducing by half the bounced checks in the portfolio due to lack of funds.
According to a survey on the purpose of the subsidized credit line at a 24% interest rate, the amounts disbursed reached ARS141,000 million, out of which 30% was channeled to the payment of salaries, 13% to cash checks, and 50% to meet working capital needs. These three uses explain 93% of disbursements. On average, each MSME received ARS1.5 million.
The number of MSMEs assisted exceeded 91,000, 44% of which used the funds to pay salaries, 13% to cash deferred checks, and 42% to meet working capital needs. Nearly 240 companies received loans channeled to health services.
Out of ARS141,000 million disbursed, domestic-owned banks explained 42% (ARS59,000 million) with two institutions holding 72.3% of this amount: Banco Galicia (44%) and Banco Macro (28.2%).
Institutions under the umbrella of ABAPPRA have disbursed 39.3% (ARS40,800 million), Banco Nación (53.5%) and Banco Credicoop (15%) coming to the fore. They are followed by Banco de la Provincia de Córdoba (10%), Banco de la Provincia de Buenos Aires (6.6%), and Banco de la Provincia de Neuquén (3.7%).
Institutions with foreign capital have disbursed 29% (ARS40,600 million), 62.3% of which was mostly granted by two banks: Santander Río bank (38.7%), and BBVA (23.8%). The subsidized credit line offered at 24% annually has a three-month grace period. In this context, MSMEs must have a certificate granted by the Ministry of Productive Development in the AFIP website.
Judging by the availability of FOGAR loan guarantees and the speed at which credit lines are approved, the target of lending credit lines for ARS220,000 million is likely to be accomplished.
May 5, 2020.