MP 944/2020 institutes the “Emergency Employment Support Program” to finance the payroll of Small and Medium Enterprises

MP 944/2020, which came into force on 4/3/2020, establishes the rules and guidelines necessary for the implementation of an Emergency Employment Support Program, aimed at carrying out credit operations for entrepreneurs, business companies and cooperative societies, to assist in the payment of employee salaries.

The emergency program will be aimed at the people mentioned above, with annual gross revenue exceeding R $ 360,000.00 (three hundred and sixty thousand reais) and equal to or less than R $ 10,000,000.00 (ten million reais), calculated based on in fiscal year 2019, highlighting that credit companies are not included in the plan.

In order to meet the cash flow needs of companies, the legal entity that subscribes to the emergency plan may include the totality of their payroll, for a period of 02 months, limited to the amount equivalent to up to 02 (two) times the minimum wage per employee. The credit lines will be used exclusively for the processing of payrolls, in the manner provided by the MP.

To access credit lines, eligible companies must have their payroll processed by a participating financial institution, that is, all financial institutions subject to the supervision of the Central Bank of Brazil.

As an obligation to adhere to the plan, companies must contractually assume the obligation to provide truthful information, as well as not using the resources for a purpose other than that established, that is, payment of their employees. Furthermore, the company is prevented from terminating, without just cause, the employment contract of its employees in the period between the date of contracting the credit line and the 60th day after receiving the last installment due to settle the government financing.

It should be noted that the failure to comply with the obligations established in the program requires the early maturity of the contracted debt, which may burden the employer even more. On the other hand, the responsibility for paying the amounts due for credit operations contracted in the emergency program will be shared between the participating financial institutions (15% of the value of each financing) and the Federal Government (85% of the value of each financing).

According to the text, the BNDES will receive R$ 34,000,000,000.00 (thirty-four billion reais) for the execution of the program, and the state entity will act as the managing financial agent.

Participating financial institutions may formalize credit operations under the Emergency Employment Support Program until June 30, 2020, subject to the following requirements:

  • interest rate 3.75% per annum on the amount granted;
  • term of 36 months for payment;
  • 6-month grace period for payment to start, with interest capitalization during this period.

The granting of credit will be subject to the internal evaluation policy of the banking institution, which may consider possible restrictions in credit protection systems on the date of contracting and the default records in the credit information system maintained by the Central Bank of Brazil, in 06 (six) months prior to contracting, in order to decide on the release of the amounts. Thus, there may be a negative bank.

It is important to note that if the company does not pay the amounts received through the Emergency Program, the participating financial institutions must promote, at their expense, the debt collection in their own name, in accordance with their credit policies, either in the extrajudicial and / or judicial, in addition to collecting the amounts recovered from the National Bank for Economic and Social Development – BNDES, which will return them to the Federal Government.

The supervision of this program will be the responsibility of the Central Bank of Brazil, with financial institutions liable to impose fines and penalties, if they distort the objective of the emergency measure. Finally, some formalities usually imposed by financial institutions for the purpose of credit release are waived, namely:

  1. The company does not need to have the discharge certificate through which it certifies that all employees have been formally hired;
  2. The company does not need to have a certificate of FGTS regularity;
  3. The company is exempt from presenting CND, including social security, to have access to credit;
  4. The financial institution is exempt from consulting CADIN for granting credit;

The agribusiness company does not need to prove the payment of the ITR, related to the rural property, corresponding to the last five years.