Brazilian Small Businesses Face Debt Challenges Amid Rising Credit Costs and New Support Measures

As of July 2026, 25% of small businesses in Brazil reported having overdue debts, marking a slight improvement from 28% in March, according to the 13th edition of the Pesquisa Pulso dos Negócios by Sebrae. Meanwhile, the proportion of small businesses without any debts rose to 43%, up from 39% in March, reflecting some positive movement in debt management within the sector. However, accessing credit remains a significant hurdle; 26% of small businesses applied for bank loans in the preceding three months, but only 46% were successful, with 44% denied and 9% still awaiting decisions.

One major concern for micro and small enterprises (MPEs) is the rising cost of credit. The Pronampe program, a government credit line established in 2020 to support businesses during the pandemic, uses resources from the Fundo Garantidor de Operações (FGO) to safeguard against defaults. Initially, Pronampe loans carried an interest rate linked to a 2% annual Selic rate plus an additional 6%, but with current Selic rates soaring to 14% per year, the cost of borrowing has increased substantially.

In response to evolving financial challenges, the government introduced Novo Desenrola this year, updating Pronampe by extending grace periods, revising payment terms, increasing credit limits, and expanding FGO resources. These changes aim to help small businesses better manage debt and navigate financial crises.

The mixed results from loan applications reveal ongoing difficulties for small businesses striving to secure funding despite government initiatives. The continuing demand for credit paired with rising interest rates underscores the precarious financial environment for MPEs as they seek to recover and grow.