30% of Brazilian entrepreneurs take out loans to keep cash flow out of the red – survey

RIO DE JANEIRO, BRAZIL – Research shows that keeping the cash flow out of the red motivates more than 30% of entrepreneurs to seek loans. Other reasons are opening new businesses and paying debts.

When facing a challenging economic context for business continuity, the search for credit among entrepreneurs is mostly done to keep the cash flow in the red. According to a survey by Lendico, a fintech specialized in personal credit, 34% of entrepreneurs take out loans for working capital.

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According to Lendico, which offers online loans, the application for credit on the platform is dominated by micro-enterprises, accounting for 77% of applications. After working capital, the most recurrent reasons for seeking credit among entrepreneurs are:

opening new businesses (23.5%);
debt payments (18.9%)
investment in stock (15.1%)

Even with the predominance of loans for working capital, the platform also recorded an increase in credit applications for starting a new business, the second most common reason. These loans grew 37% in the first half of this year compared to the same period in 2020.

Regarding the most sought-after amounts, Lendico indicates a demand for loans ranging between R$5,000 and R$10,000 (US$1,000 – 2,000), amounts requested by almost 40% of entrepreneurs.

Micro, small, and medium-sized companies have good prospects for this year and have already increased the search for credit by more than five times (435%) in the first half of 2021, compared to the same period last year.

Loan applications went from 572 in the first half of 2020 to 3,062 in the same period of 2021. The data are part of a survey by Capital entrepreneur, a credit platform that connects entrepreneurs to more than 300 financial institutions.

This increase, according to the study, is justified by two main points: the increase in the circulation of people after a turnaround in the vaccination of the population and the National Program to Support Micro and Small Enterprises (Pronampe), which was interrupted in 2020 and is now back in operation, under new guidelines.