Law 14.043/2020 creates the Employment Support Emergency Program

Updated: May 11

Hand holding work card
The Law has made it possible for companies to obtain loans through credit line

Law 14,043, of August 20, 2020, created the Employment Support Emergency Program. Among the highlights of the program instituted by the new Law, companies can now obtain loans through credit line provided by the Federal Government, so that employers can pay their employees' wages.

The eligible companies are those with annual gross revenue equal to or greater than BRL 360 thousand, and equal to or less than BRL 50 million (amounts measured on 2019).

The company can request a loan of up to 100% of the payroll for a period of 4 months, with a limit of up to 2 minimum national wages per employee. If the loan is approved, the companies will have up to 36 months to make the payment in installments, with a grace period of 6 months to start the payment.

The financial advantage of this line of credit resides in the amount of interests, which the law fixed on 3.75% per year, a much lower rate than that of the average banking loan.

Banks may operate these loans until October 31, 2020, but not all entities may adhere to the program. In addition to the gross revenue condition mentioned above, this credit line is only available to entrepreneurs (empresários), simple entities, business entities, and cooperatives, but not to credit entities and organizations of the civil society.

Besides paying wages, the employer may use this line of credit to honor settlements approved by the Labor Courts, which represents a relief to who entered into settlement agreements having in mind their business results before COVID-19 stroke.