Personal micro credit
On January 18, 2005, the Programming Law for Social Cohesion (LPCS), also called Plan Borloo, was promulgated. At the same time, the Social Cohesion Fund (FCS) was created, which aims to "guarantee loans to natural or legal persons for social purposes and loans to the unemployed or those with minimum social benefits creating their business" ( ION 2005 -32 of January 18, 2005 - Article 80.III of the LPCS). This fund allows, among other things, the guarantee of personal micro credit. The project has an envelope of nearly 80 million US dollars. Managed by the Caisse des Dépôts et des Consignations, the funds are made available to individuals through banks, duly authorized social actors or banks. Little diffused and poorly known, personal microcredit is nevertheless a vector of social integration. A real tool for social integration, personal micro credit makes it possible to enhance and empower the borrower by granting him autonomy and the means to achieve what the traditional circuits do not allow him. Sometimes also called social micro credit, it differs from a donation because it must be repaid and at the same time integrates the borrower into society. Bringing three different circles into contact, the lender (a financial organization), the guide (a guide from associations) and the applicant / borrower, micro credit thus makes it possible to lend to those that banks no longer lend.
Who can benefit ?
Personal micro credit is aimed more particularly at vulnerable people excluded from the traditional banking system, who have too low income, social minimums or affected by unemployment and / or who suffer from the fragility of their professional situation. Applicants may be in a situation of over-indebtedness, their files would then be studied on a case-by-case basis. Personal micro credit can also be addressed, under special conditions, to people registered in the personal credit incidents file (FICP) or central check file. Applicants can also sometimes find themselves in a situation that no longer allows them to meet the access criteria of traditional borrowers, whether in terms of age or illness. Personal micro credit can also be aimed at students, apprentices and young workers. Applicants must, however, be accompanied in their procedures by a social or associative actor, a benevolent interlocutor of the organization granting the personal micro credit who will act as guide and referent. The applicant must however have the necessary repayment capacity, the legislative and regulatory provisions relating to consumer loans applying to personal micro credit.
To do what ?
The purpose of personal micro credit is generally the acquisition of goods or services to improve the borrower's situation through a personal project aimed at improving the personal situation (economic, social, family, etc.) of the beneficiary. It is different from the professional micro credit which is granted to create or develop a professional activity. In most cases, it is used to finance improved mobility (purchase or repair of a vehicle, access to a driving license), to facilitate access to housing (work, deposit, furniture, move, etc.) to access to vocational training or to finance studies, or to finance medical care that would be poorly reimbursed (optical or dental care). Finally, it can be used to cover expenses resulting from a life accident (divorce, illness, handicap, unemployment, etc.).
What personal micro credit does not allow
The personal micro credit does not take care of the repurchase of debts, the overdrafts, the arrears of rent or the creation of a business (see in this case professional microcredit).
What amount for what duration and at what rate?
The amount of the personal micro credit may vary depending on the repayment capacity of the applicant. Generally low, it can vary between € 300 and € 5,000. This amount is the subject of a joint study between the applicant, the lender and the accompanying person depending on the applicant's project and its relevance. The average loan amount is around € 2,300 (€ 2,266 in 2014)
The repayment period is between six months and four years, but may however be extended to five years exceptionally depending on the conditions and depending on the study of the case. The average repayment period is 33 months.
The rate of personal micro credit is the subject of a dialogue between the borrower and the lender, it is located between 1.5% and 4% at a fixed rate and more generally the rate of 3.5% is granted. . According to the departments, all of the interest is paid back to the borrower once the microcredit has been repaid.
Derogations may be granted to these provisions but this remains on an experimental basis. Each personal microcredit is the subject of a report, both by the accompanying person and by the lender in order to carry out a social study on the means to get out of precariousness, on the use of funds and on the impact of the system on the societal environment.
How to repay?
In order to reintegrate the borrower into a classic banking scheme, the reimbursement of personal micro credit by direct debit from a bank account is preferred. This gives better visibility into the management of the applicant's finances. On the other hand, no reimbursement is granted by granting a bank overdraft. If the borrower were to encounter repayment difficulties. The personal microcredit can be the subject of an early repayment without charge, and it should be noted that there is no application fee to access it.
In accordance with the regulations in force, the applicant has a right of withdrawal which can be exercised for 14 days following the date of signature of the contract.
The disbursement of funds to the service provider is theoretically made between 11 and 17 days after signature in order to respect the legal withdrawal period from which the borrower benefits.
Which address ?
It is first of all necessary to distinguish in addition to the applicant / borrower, two spheres. The social sphere and the banking sphere. There are therefore approximately 500 local branches of support networks and more than 20 banking partners.
In most cases marginalized vis-à-vis the banking system, the applicant for personal microcredit is not intended to apply directly to a bank. He will contact a social support organization which will act as an intermediary. The role of this guide will be to welcome the applicant, to study his project with him and to provide him with the necessary assistance to set up and present the file to the banking organization. Real link and support, the role of the contact will be one of trust because he will guide the applicant with kindness in his project, from start to finish. If the borrower were to encounter difficulties in repaying the drafts of his personal micro credit, the guide would then make a point with the borrower in order to analyze the situation and adapt it for the good of all. Usually from associations, this referent allows to have a relevant and objective look at the borrower's request and also in order to anticipate the payment difficulties of vulnerable groups and to try to remedy them in a preventive way. .
The associations that provide access to personal microcredit are of varying types but the most commonly encountered are associations with a social vocation such as the local branches of the National Union of Family Associations, Red Cross, Catholic Relief, Restos du Cœur, Local missions, district boards, employment centers or communal social action centers (CCAS). All the contact details of the actors taking part in the first level of personal microcredit are available in the town halls. These actors are in contact with financial organizations duly authorized to grant personal micro credit. These include the Caisse des Dépôts et des Consignations, the Crédit Coopératif, the Banque Populaire, the Caisse d'Epargne and the Crédit Municipal de Paris.
What documents do I need to provide?
To constitute a personal micro credit file, the applicant must justify a specific project and therefore provide a quote for it, nominative, dated and signed. It is necessary for him to provide an original identity document (passport, national identity card or residence permit); the last three payslips or certificate of opening of Pôle Emploi rights or pension, invalidity or annuity form; the last three statements of all its bank accounts (current accounts, savings accounts, etc.); his last tax notice or non-tax notice; the last statement of CAF services, if applicable; the last rent receipt or proof of quota and, where applicable, current loan contracts.
Although qualified as "social", microcredit remains subject to final validation by banking organizations which bear 50% of the guarantee (the remaining 50% are covered by the FCS). The file follows a classic route in addition to validation with the social sphere which judges the relevance of the project. The file, if it meets the conditions, is then brought to the banking organizations which remain the decision-makers in the matter. At the end of 2014, nearly 70,000 personal micro credits had been granted since its creation, for a nominal amount of US $ 156 million. It is estimated that there are between 10,000 and 14,000 personal micro credits that are financed per year.