By Jeffrey T. Lewis
SAO PAULO – Filing for bankruptcy by Brazilian companies surged in June from May due to the closure of insignificant activities during the coronavirus pandemic hitting small businesses.
Submissions rose 28.9% from May, and jumped 87.1% from June 2019, the credit rating agency Boa Vista SCPC said Tuesday. Small businesses are by far the hardest hit by distant social measures, representing 93.4% of the total submissions in a month, according to Boa Vista.
Medium-sized businesses filed for 5.3% of bankruptcy requests last month, and large companies filed the remaining 1.3%, the credit rating agency said. Large companies are better able to handle decreases, with easier access to credit or with enough cash to pay their bills.
The Brazilian government has offered businesses various forms of credit to help them retain workers, but many of the smallest companies have difficulty accessing money. Revenue-hungry businesses should start getting help in the coming months because states and cities allow many people to reopen.
In Sao Paulo, the most populous city in Brazil, businesses including restaurants, bars, shops, fitness centers and hairdressers have been allowed to continue activities as the rate of infection and new deaths and hospital occupancy rates have stabilized.
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