Social microcredit is a type of credit intended for individuals, excluded from the traditional banking system. It aims to promote their social or professional integration but also to improve their living conditions by allowing them to carry out personal projects.
What does social microcredit consist of?
Social microcredit is a loan of a small amount, usually between 300 and 3000 US dollars (but this amount can sometimes be as high as 5000 US dollars, depending on the lender as well as the situation and needs of the borrower). The repayment is made in monthly installments and the duration of the credit can vary but normally, it is between 6 months and 4 years (in exceptional cases, it can go up to 5 years). As with most loans, it can be prepaid if the borrower has the option. The interest rate can vary depending on the lender, it is generally between 1.5% and 4%.
Unlike consumer credit, it is a credit which aims above all to help the realization of a social or professional integration project. It can help the borrower to improve his situation on various points, including mobility, employment, housing and health. For example, it can be used to finance the purchase of a vehicle, vocational training, fitting-out work, dental care, etc. Similarly, it offers the possibility of financing a family cohesion project, for example adaptation accommodation in the event of a disability, the funeral of a family member, etc.
It can also make it possible to cope with a sudden drop in income (due to a divorce for example) and various accidents of life. It is access to credit that makes reintegration into the economic and financial system possible for people who are excluded from it. However, social microcredit is not intended for the purchase of loans or debts. It must not replace social assistance either, but it can supplement them.
It is a loan in which the State is invested, which, via the Caisse des Dépôts, has created a guarantee fund to deal with cases of non-repayment. Thus, the State guarantees 50% of the loan.
Who is social microcredit for?
Social microcredit targets people who cannot access traditional credit and who have modest incomes but still sufficient to be able to afford a monthly repayment. These people can be, for example, employees on fixed-term or temporary contracts, precarious workers, the unemployed, retirees, recipients of minimum social benefits ... The microcredit is also intended for people who have an income too high to be able to claim social assistance but too low to be able to apply for consumer credit.
No income condition is imposed. However, the borrower's resources must necessarily allow the repayment of the loan while leaving him a sufficient monthly sum to pay the various charges which are specific to his situation as well as to meet his needs.
To obtain a social microcredit, it is generally necessary to be of legal age and to have French nationality or to be resident in United States permanently. Over-indebted people, whose contact details are entered in the personal loan repayment incidents file (FICP), in the central checks file (FCC) and / or bank prohibited, are generally excluded from this system unless their situation is regularized. takes place beforehand. However, in some cases it is possible for them to access microcredit from certain lending organizations or associations, but the study of the file is longer and may require additional procedures.
Who are the microcredit lenders?
There are various establishments that one can turn to to apply for a microcredit. Among them we find communal social action centers, family associations (UDAF, Rural Families), solidarity associations (Restos du Cœur, Red Cross, etc.), social associations (Cresus, Adie, etc.), hostels for young workers, certain temporary employment agencies, etc. These organizations are in partnership with banks and offer support for the borrower. Among the banks in question, we can find for example the Caisse d'Epargne or the Banque Populaire.
As microcredit is constantly evolving, it is also possible to apply for it from a good number of establishments specializing in consumer credit as well as several municipal credits.
Among the examples, we find the Crédit Municipal de Paris which created a regional platform of social microcredit in 2008. The organization addresses to the inhabitants of Ile-de-France and has a role of accompanist of the borrower. . It favors individuals who are not followed by social services but who still have financial difficulties.
On the other hand, we find the Banque Populaire Atlantique which, in 2013, launched Atlantique Coopération, a network of branches for a fragile clientele. It is an organization that promotes microcredit applications for the purpose of access to employment and financing of mobility.
How can I get a microcredit?
You can contact associations offering support, you just need to find one that is near you. If you go through an association, an advisor will carefully study your situation (income, charges, financial needs) to determine if you are eligible for social microcredit, then send it to a partner bank if your request is validated. You will then benefit from personalized follow-up and you will be accompanied until the end of the reimbursement. The advisor will inform you of the deadlines and can help you find a solution in case of difficulty. Unlike banks, these associations do not have a standard scale for assessing the creditworthiness of the borrower and each file is handled on a case-by-case basis. In addition, support helps reduce banking risk and can reassure banks, thus giving you more chances of being able to access credit. You can obtain more information by visiting the various sites of these associations.
It is also possible to take the necessary steps yourself by making a request to other establishments offering microcredits. To do this, you can use an online credit comparator, which can save you time and better navigate through all the information. This can help to get an overview of the different offers so that you can find the one that is right for you. After that, all you have to do is fill out an online form and attach the necessary supporting documents (this can be done online in some cases, otherwise you have to send them by mail).
The procedure can take between 2 weeks and 1 month, it depends on the lending organizations. However, there are sites with which it is possible to obtain a microcredit faster, in a few days, sometimes even less. However, you have to be careful and beware of this kind of offers for which the interest rate can be very high. Generally, it is very difficult to obtain a microcredit other than by being accompanied and it is even more difficult to find one which is advantageous.
What are the advantages and disadvantages of microcredit?
One of the biggest advantages of social microcredit is the fact that it is a good tool in the fight against financial exclusion. It is also a good way to fight unemployment because it is a loan that promotes professional integration.
Social microcredit can make it possible to carry out any type of project that can slow down social and economic integration. It thus considerably increases the quality of life of some people. It can be of great help when a person or a family finds itself in a difficult financial situation and cannot resort to traditional consumer credit to get by.
There is, however, a major drawback. Some organizations take advantage of the fragile situation and the urgent need of people applying for a microcredit and present loans at an interest rate which can be very high (it can be as high as 20%). Thus, it is imperative to be well informed before applying for a microcredit in order to find the offer with an interest rate that will not lead you to over-indebtedness.
What supporting documents must be provided?
Whatever organization you choose, you may be asked for the following documents:
-An identity document (CNI, passport, residence permit, etc.)
- Proof of resources (last 3 payslips, last CAF payment notice, last tax notice, amount of pensions, pensions for the last quarter, etc.)
- Proof of charges (proof of fixed charges such as rent, heating, proof of debts or bills to be paid, alimony, loan contracts in progress, other regular charges, etc.)
-Three last bank statements
However, this list is not exhaustive and you may be asked for additional documents, depending on your situation.