Micro credit helps people who find themselves on the fringes of the traditional financial system, by granting them a small loan to launch projects or simply finance a means of transport to get to their work.
Promote entrepreneurship with micro credit for the most vulnerable
If micro-credit were to be proclaimed, it would be the promotion of talents who experience a form of exclusion to get a job or to start a business. For the past thirty years, the association has provided its expertise for this purpose by helping women, seniors and young people to finance their installation in their own business. This population hardly knows how to make itself heard, in an economic world which favors the sectors located in large centers. The mission of social borrowing aims to finance economic projects, modest but viable throughout the territory.
For several years, outstandings relating to micro-credit projects have increased steadily. In 2017, the number of obtaining this type of loan increased by 8%, which shows a strong dynamic for this sector. In 2018, more than 25,000 microloans were granted to people excluded from the traditional banking system. In some cases, the agreement of this type of credit opens the doors of network banks, which accelerates the realization of the professional project. These loans allow the acquisition of a few tools to launch a workshop, or the payment of the commercial lease. With a few thousand dollars available, workers find their way back to work without being knocked out by borrowing at high rates.
Another good news for the representative of the association, the rule which limited the micro credit to the companies installed for less than five years has just been lifted. This system opens up new prospects for small entities which are struggling to increase their turnover. If the association has managed to find a balanced budget for three decades, it is because its economic model shows a certain stability.
Fight unemployment with micro credit
On average, the sums do not exceed USD 10,000 so that the loan holder can easily repay his loan. In the event of default, most of the time, the project holders subscribe to a guarantee fund which reimburses the loan. However, the default rate of such a financial model seems lower than corporate loans. However, microcredit does not stop only at financing companies. Projects can focus, for example, on acquiring a car for people who find it difficult to find a job. To do this, two types of micro credit coexist.
The first aims to create a small business, while personal micro credit mainly finances access to employment (financing of a means of transport to get to work). In addition, professional micro credit represents 60% of outstanding for the creation of a business. If the credit helps to get out of immobilization, it is nonetheless modest to limit the risk. Finally, it can also be supplemented by a credit consolidation to lower its debt ratio while developing its activity. To do this, a simulation makes it possible to view the new credit conditions.