Professional microcredit is a type of credit that is aimed at people wishing to finance the creation, takeover or consolidation of a business but whose resources are not sufficient for them to be able to claim traditional credit. Generally this type of credit is intended for small craft or commercial enterprises.
What does professional microcredit consist of?
Professional microcredit promotes the creation of small businesses and it is a way for banks to reach a solvent clientele but until then on the margins of the traditional banking system. When one or more loan requests are refused by the banks, professional microcredit is a good alternative to help entrepreneurs develop their activity.
The maximum amount of the loan is 25,000 US dollars, it is a ceiling fixed by the European Commission within the framework of the Union programs. However, most of the time, the amount offered does not exceed 10,000 US dollars. The interest rate is often higher than 5% and the repayment is made in monthly installments over a period which can reach a maximum of 5 years. There is sometimes the possibility of requesting a deferred repayment, depending on the organization to which the borrower is addressing.
Professional microcredit generally benefits from support from an organization which is also the funder or co-funder of the project. It is a loan which can, for example, make it possible to finance the purchase of stock or equipment, the acquisition of a professional vehicle, working capital to launch the activity ...
Every year, professional microcredit helps tens of thousands of entrepreneurs to start their business. According to the General Inspectorate of Finance, microcredit made it possible to create or maintain 48,000 jobs in 2008.
Intended to increase the means of guaranteeing microcredit, the Social Cohesion Fund (FCS) was created on the initiative of the State and its management has been entrusted to the Caisse des Dépôts et Consignations. It is a device that makes it possible to offer a guarantee in the context of microcredit, which provides a certain security for the banks which grant this type of loan. The additional support procedure (NACRE device) is also a means of reassuring the lender vis-à-vis microcredit applicants. A Bank of United States microcredit report states that in 2011, more than 200 million loans for professional projects were granted by banks with 96.7 million US dollars released by the FCS.
Who is professional microcredit for?
Professional microcredit is aimed at people with low incomes who wish to create, develop or take over a business and more particularly entrepreneurs to whom one or more banks have refused a loan that could have financed their project. These people can be, for example, the unemployed, beneficiaries of social minima, precarious employees, etc. Most of them are business creators who do not have access to the traditional banking system because they cannot present sufficient guarantees to obtain a loan. classic.
Professional microcredit is aimed at all entrepreneurs, whatever their status and sector of activity. This includes auto-entrepreneurs, micro-enterprises, individuals, EURL, SASU, SARL, SAS… All types of activity are concerned. However, given the small amount and type of aid, most of the time this involves financing a small business that specializes in, for example, trade or services and not industry. More particularly concerned are companies in creation and as well as companies with less than 3 employees and less than 5 years of existence.
Who are the professional microcredit lenders?
Banks can participate in microfinance directly (this is the case with the Savings Bank, La Banque Postale, Crédit mutuel, etc.) or indirectly (BNP Paribas, Banque Populaire, etc.) by financing IMF. Some banking establishments are approved by the Social Cohesion Fund in order to participate in the microcredit system. The accompanying network transmits the applicant's file to the bank with which it is a partner so that the latter can study it and make a decision to grant or refuse credit depending on the applicant's personal situation. If the request is accepted, the contract can be signed by the borrower who will then be followed for the duration of the loan.
The most important player in microcredit in United States is Adie (Association for the Right to Economic Initiative). It is an association that offers funding of up to 10,000 US dollars and the repayment period is 6 to 48 months. The interest rate depends on the amount borrowed. For a loan of 500 to 6000 US dollars it is 7.67% and for a loan between 60001 and 10 000 US dollars it is 6.67%. It's rates are fixed.
There are also other associations offering microcredits, in particular local platforms like Crea-Sol which is in the South of the United States for example. In order to find organizations offering professional microcredits near you, you can get information from your chamber of trades or from your chamber of commerce.
The associations act as guarantors with the banks in order to give the borrower the possibility of obtaining a loan under good conditions. This allows banks to secure records and minimize risk.
How can I obtain a professional microcredit?
First of all, it is important to prepare your plan to create, take over or develop a business. You can get help from certain structures, including APCE (Agency for the Creation of a Business), ACFCI (Assembly of French Chambers of Commerce and Industry), NACRE (New Support for the Creation and Resumption of Business). 'Business). You must then put together your project (business plan, market study, visibility study, etc.). Organizations such as BGE, PFIL, United States Active Territorial Funds, and others can help you develop your project. Some networks will help you set it up, apply for funding and develop your business.
The Association for the Development of Economic Initiative (ADIE) is the main actor in professional microcredits. If you decide to apply for a microcredit from an association like this one, it will be decided to grant the loan according to certain fundamental criteria including your personal situation, your motivation, your experience, your skills, your project ( forecast turnover, customer potential, etc.) as well as your repayment capacity. You will also be asked for a personal guarantee amounting to 50% of the loan. This deposit can also be carried by a person around you.
It is possible to make an online request, by doing a simulation in order to arrive at a monthly payment that corresponds to your repayment capacity. You will then have to complete a form which will contain information relating to your personal and professional situation as well as your financing needs. In order to speed up your request, remember to keep all the documents concerning your project as well as those relating to a possible situation of over-indebtedness at hand. The online request usually takes about ten minutes. Depending on your request, you can make an appointment online (or by phone if you prefer) with an advisor near you. It is an appointment which is essential to finalize the study of your application for professional microcredit .
The procedure is similar in most associations specializing in microcredit. In order to obtain this kind of loan, it is often essential to meet certain conditions. For example, your need must be professional, the company must be in creation or have less than 5 years of existence, several requests for classic bank credit must have been refused or the situation must leave no chance of obtaining this kind of loan etc. To find out the exact conditions for accessing microcredit, you should contact the organization of your choice.
What are the advantages and disadvantages of professional microcredit?
It is a credit that promotes wealth creation by allowing people who cannot access traditional loans, to set up their business and generate income. The companies financed by this system generally have a longer lifespan and are stronger than the average for young companies since they are supported and accompanied in their development.
However, professional microcredit has certain limits. As the maximum amount is often 10,000 US dollars, it can only finance small projects. This may not be enough for some entrepreneurs. In addition, the interest rate can be considerably high.
What supporting documents are required?
The list is not exhaustive and the documents requested may vary from one organization to another. However, most of the time you will need the following documents:
- Identity document (CNI, passport, residence permit)
- Your last 3 bank account statements (personal and / or professional if you are already self-employed)
-A proof of address of less than 4 months (notice of residence tax, electricity, gas, water, Internet, telephone bill, etc.)
-Your provisional financing plan
-All documents relating to your project