Financing and Investment Programs
The purpose of the Program for Development of Santa Catarina Businesses (Prodec) is to offer tax incentives for the setting up or expansion of industrial and agri-business enterprises which will generate jobs and income in Santa Catarina. It is the delaying of total or partial payment of ICMS (Goods and Services Circulation Tax) to be generated by the entrepreneur.
Incentive amounts (total value of the operation): 100% of the project’s fixed investment value, except for the land.
Incentive percentage: up to 75% of the ICMS generated.
Fruition deadline: Up to 200 months for textile, agro industrial, steel, and automotive activities; 120 months for other industrial activities.
Grace period: A maximum of 48 months for each appropriate installment, depending on the score received by the project.
Amortization: Each installment of the incentive should be paid to the State Treasurer in its entirety at the end of the grace period.
Interest: Legislation establishes up to 12% per year. However, it is up to Prodec’s Deliberative Council to establish an adequate rate for each project, based on the evaluation it received on the score sheet. Among other items, the following are evaluated: job generation, technological value added, type of business venture, business location, and attention to the environment.
Priority Regions for investment: Mountain and Northern Plains.
In Santa Catarina, there are two banks ready to meet entrepreneurs’ needs. Both of them work as channels for BNDES (Social and Economic Development National Bank) resources and other financing sources.
Santa Catarina State Development Agency (Badesc)
Loan capacity: About R$ 1 billion.
Beneficiaries: Practically all sectors of Santa Catarina’s economy. There are some sectors that, due to market restrictions, technology, and excess supply, face restricted support, such as red pottery, coastal hotels, and textile production. Badesc’s priorities are small businesses which have received between 80 and 85% of operations and 55% of amounts invested.
Micro-credit: Since the establishment of the Banco da Família (Family Bank) in 1998, up until 2004, Badesc invested nearly R$ 140 million in micro-credit in the state.
What can be financed: In traditional credit lines, fixed investments (civil construction, equipment, industrial installations) and working capital can be financed. In these operations real estate cannot be financed, as can be done in special lines such as Badesc Cooperar. Badesc also finances the Fund for Municipal Development, through its own program, for administrative modernization and infrastructure investments.
Deadlines and Conditions: Variable. As a general rule, the grace period is from 12 to 24 months, a period during which the beneficiary company pays contractual interest on a quarterly basis. The amortization period varies between 48 and 72 months, with monthly payments.
Financing limit: From 60 to 90%, possibly reaching 100% in the case of small businesses (working capital). For setting up a new business, participation is limited to 50% of the total investment.
Regional Development Bank for the Extreme South (BRDE)
In 2003, the BRDE financed nearly R$ 167 million through 595 operations in Santa Catarina: 523 for the primary sector, 33 for the secondary, and 39 for the third, totaling nearly R$ 167 million. Added to the induced investment, the amount jumps to R$ 209 million invested in the State last year, resulting in 8,675 new job positions.
Beneficiaries: Industry, commerce, services, agriculture and cattle raising, infrastructure, individuals.
What can be financed: Construction, facility expansion or reform, purchase of equipment, program and product development, human resources training and qualification, energy consumption rationalization, working capital associated to the investment to be made, among others. The BRDE Small Business Special Program offers special conditions and simplified documentation for small businesses with over two years of operational activity or entrepreneur professional experience. Another special program finances working capital for the production of goods designed for exportation.
Terms: Up to 5 years, with a grace period of up to two years included in the total term. The terms are flexible, depending on the business venture contemplated.
Financing Limit: From 60% to 90%, depending on the item financed and the size of the company.
Support for micro and small businesses
The Local Productive Arrangements (LPAS) and Retail Service, which guarantee entrepreneurs and businessmen access to solutions by SEBRAE/SC, are the institutions priorities for the 2005/2007 three years. After making contracts with private and public partners, LAPS will benefit the following sectors: leather and shoes, tourism, textile and clothing, lumber and furniture, agribusiness (apiculture, cachaça, aquaculture and fishing, floriculture), metal-mechanics, chemical and PVC.
The Brazilian Micro and Small Business Support Service in Santa Catarina (SEBRAE/ SC) annually invests about R$ 50 million in projects and support and development efforts for the economic activities of small businesses.
In order to fulfill its mission of stimulating the emergence of new businesses and supporting existing ones, SEBRAE/SC identifies and offers solutions to Santa Catarina’s businessmen. In addition, it qualifies, guides, and trains entrepreneurs who seek results, growth and social development, resulting in job and income creation. SEBRAE/ SC operates in the areas of education, trade, technology, information, and public policies, using three market approach methods: individual, sectorial, and territorial.