Economics in a picture
Credit lines with public guarantee allowed for an increase in credit to companies with low risk and most affected by the pandemic
According to data from the Central Credit Register for September 2020, 47% of the amount of loans granted from March to September 2020 to private non-financial firms refers to government guaranteed credit lines. For loans with a maturity of more than 1 year, this percentage rises to 60% of new loans. Financing through these credit lines allowed for longer maturities and lower interest rates than that observed in the period before the pandemic.
Using information on the firms’ risk estimated using financial information from past years and on the impact of the pandemic on different sectors, it can be seen that, compared to 2019, government guaranteed loans allowed for an increase in credit to firms with lower risk before the pandemic and that operate in sectors more affected. In contrast, higher-risk firms, whose viability could be more easily threatened by any shock, obtained a smaller proportion of the amount of loans through loans with government guarantees.
For more details see section 2.4, part III in Banco de Portugal Economic Bulletin, October 2020.