Microcredit has always existed through mutual social assistance and parallel economies where individuals could borrow from an unauthorized network, family, friends or even relationships and connections. However, the microcredit was democratised and formalized in 1976 with the creation of the Bramman Bank by Muhammed Yaxus, Bangladeshi economist and Nobel Peace Prize winner in 2006. The aim was to benefit a particularly impoverished country, Bangladesh, a population excluded from financial system, credits easily and quickly accessible. By supporting a micro-economy and micro-entrepreneurs and enabling these people with limited resources to increase their income and develop their businesses, micro credit has become an access to the world of work and a step towards empowering people. fragile populations in the margins of the system. A real financial system had just been formalized. Since this system has exceeded the limits of Asia and has reached the developed and developing countries.
What is online micro credit?
Thus, the micro credit is a loan of a small amount granted by a bank to individuals whose precarious or difficult financial situation does not allow them to go to banks. Around this financial system in full development, the micro finance system also offers other products (microinsurance, micro-franchise, advice, awareness of professional projects). Created in 1989 in France, ADIE opened the way to micro credit in the hexagon with the help of Daisy Popak, an economist strongly involved in issues of solidarity economy and job creation. Very close to Muhammed Yaxus and his philosophy, the latter was inspired by his model to implement and develop this system in France. Today, micro credit is a tool for promoting full employment and 70% of micro-credit borrowers were unemployed. In France, microcredit finances 30,000 companies a year. The survival rate of a company that has benefited from a microcredit is 75% in the three years following its creation, which is quite comparable to the survival rates of a company that has not benefited from this system.
Today many sites offer mini credits online and offer the loan of small amounts
You can subscribe to these credits – often mistakenly defined as micro credits – with a banking organization, whose specificity will be to grant you a loan for a limited amount (between 3,000 and 60,000 euros). It must be solvent, that is to say, prove that one is able to repay by showing payroll records, a bank history and find a guarantor. Rates remain high compared to more traditional banks and support to the project is not necessarily provided. Rates are easily between 3% and 20%. And indeed, these mini credits are not to be confused with the online credits that have a true professional purpose and have a lapped insertion device. These banking institutions that lend small amounts remain consumer loans and no help is provided for a professional approach.
With regard to micro-credit supported online, three actors are present: the borrower, the banking organization and the social coach who ensures the smooth running of the project. These micro credits are supported online for adults or emancipated minor who are denied a loan by a conventional banking institution, often for lack of solvency. The social coach advises the borrower as and when credit. This may be ADIE or Crea-Sol but other organizations are also available. Micro credits can be asked directly online, on the internet and requests are processed quickly because this device is designed to respond to urgent situations.
Online micro credit: two needs, two devices
In supported loans, there are two main types of online credit: personal credit for employment or micro-credit and micro-credit.
In the first situation, personal micro-credit allows people who benefit from social minima, low or irregular income or unemployment benefits to find ways to access employment more easily. In fact, the personal micro-credit for employment makes it possible to buy a car to go to one’s place of work, to pass a permit, to repair a car, to move to an area more suitable for hiring or to buy a car. equip with basic equipment. The personal micro credit accompanied is subject to rules. They concern people who wish to reintegrate into a professional approach but who do not have the material means. This micro credit is limited to 3,000 euros – 5,000 euros in exceptional cases – and is reimbursed for a minimum period of 6 months and a maximum of 36 months with equal monthly payments whose interest will vary from one bank to another .
Insurance remains optional for this type of credit
Bank charges are always borne by the bank that will lend. The social action structure can help to initially choose the lender and help the borrower to build the case with the bank. The relevance of the project and the analysis of the financial capacity of the borrower are seen in detail by the banking organization and the social action structure. Finally, for the duration of the loan, the social action organization accompanies the borrower and follows the project. In France, CAF is the body that offers the most micro social loans, even if it names these “CIF loans for consumption”. They allow the beneficiary to invest in household appliances, finance major purchases of everyday life and not to live in precariousness, which is often a barrier to finding a job or a stable situation.
Micro credit online: good to know
Online micro-credit works like a bank loan and three important elements make up the loan: a Total Effective Annual Rate (APR), a repayment term and a predetermined fixed monthly payment, which the borrower undertakes to repay. The rates of this type of credit are higher than for a usual credit, that is to say around 4% on average. In France, each department has a social action structure that will be ready to accompany the borrower and study the project. It takes between 48h and 8 days on average for the social action structure to return to the borrower and gives a response on the validity of the project. The request can also be made online directly in all social action structures or associations or solidarity banks offering micro credits.
In the case of a very specific project, it is possible to accompany its micro credit with regional aid and do not hesitate to talk to his guide who also knows very well networks where to find other complementary funds. It should be noted that 97% of micro credits have been repaid against 4% of unpaid loans for a conventional credit. It seems that the support structure and selective sorting of the file is part of good practice and that solutions are always found. The social worker is always there to negotiate again the duration of the loan and advise the borrower in his steps and also in missteps. In the case of non-payment, the Social Cohesion Fund managed by Dexia Depots guarantees half of the payments. A bright future for micro credit online!