The combination of personal loans and microcredit has developed mainly in recent years, when it became clear that, in the face of the economic crisis gripping the West, ordinary credit is unable to meet all needs and provide adequate answers to those who are looking for liquidity to deal with the basic aspects of everyday life.
What is microcredit ? The answer to the problem just mentioned, nothing but the small trust-based loans, since there are cases in which it is not possible to provide the adequate guarantees required by banks and financial companies.
The reality of micro-credit in the field of personal loans has often become decisive in order to satisfy many personal and social needs, such as paying bills or assisting the elderly, as well as trying to support the exercise of a business or an independent professional activity. : let’s see then what are the peculiar characteristics of microcredit in the field of personal loans .
- General characteristics of microcredit
- Microcredit, who provides funding?
- Production microcredit
- Requirements for accessing microcredit
- Social microcredit and students
General characteristics of microcredit
The rules on microcredit in Italy have been fully formulated thanks to the Consolidated Banking Act (Legislative Decree 385/1993) which established the basic characteristics of this form of financing, also identifying the subjects eligible for funding and the financing bodies. The Bank of Italy has set up a special list of operators accredited to operate in this specific financial branch, through the Ministerial Decree of 17 October 2014, specifying that loans through micro-credit must have a limited amount with the obligation to repay, without the obligation to present real guarantees to protect the reimbursement as in a normal personal loan: the maximum amount that can be financed amounts to 25 thousand euros for natural persons, partnerships, companies pursuant to art. 2436 of the Civil Code, associations and cooperative societies, for the initiation or exercise of self-employment or micro-enterprise activities.
Access to finance is armored for self-employed workers or companies with VAT numbers for more than five years, self-employed workers or sole proprietorships with more than 5 employees, partnerships, simplified limited liability companies, or companies co-operatives with a number of non-member employees of more than 10, while for natural persons who are in disadvantaged economic conditions, such as unemployment status, unemployment loss, income contraction or proven health problems and total income, it is possible get a loan of up to 10 thousand euros .
Microcredit, who provides funding?
How does microcredit work ? Who supplies these capitals according to the limits indicated above? All the answers to deepen the knowledge of the initiatives on the subject and the tools available are provided by the National Agency for Microcredit , whose official website is the essential reference point for obtaining the desired information. This institution is the Italian public entity in charge of the promotion and coordination of microcredit initiatives to combat economic hardship, as budgeted by the European Union programs and collaborations with foreign institutions such as the European Microfinance Platform or the European Progress Microfinance Facility , just to name a couple of the best known names, but on the web it is possible to find networks and networks dedicated to microcredit in Italy . At the state level,
Microcredit loans are managed through public tenders and notices, with particular attention given to the so-called SMEs, small and medium-sized enterprises, and micro businesses, which through a specific Guarantee Fund can access bank credit at favorable conditions.
Let’s now look at the various types of microcredit authorized in our country: the first can be defined as micro-credit production , based on loans of no more than 25 thousand euro , where the absence of collateral is offset by support, assistance and monitoring services, which therefore, it does not exhaust the relationship between the entity and the beneficiary in the simple disbursement and repayment of the loan. The micro-credit production is aimed at individuals, partnerships, simplified limited liability companies and cooperative companies with the specific purpose of supporting the start-up of a self-employment activity or micro-enterprise : the sum of money can be invested for ‘purchase of goods and / or services instrumental to the activity carried out, for the payment of specific training courses, for the remuneration of new employees or working members.
When we speak of support in microcredit we refer to all the crucial aspects of a small business , such as the development strategy and the possible study of solutions to manage critical issues, improving the activity, personnel management, accounting and financial management , the study of appropriate strategies for the promotion, dissemination and sale of the product, the possible solutions to legal, fiscal and administrative problems that may occur during the practice of the profession or business.
Requirements for accessing microcredit
The regulation establishes what must also be the requirements for access to productive micro-credit: in short, they can be considered beneficiaries
- small and medium-sized enterprises that fall within the size and turnover limits, that have been active for less than 5 years and with less than 5 employees
- craft enterprises belonging to any sector,
- consortia and consortium companies .
Requirements include compliance with certain balance sheet values , ie assets with a value not exceeding € 300 thousand, revenues of less than € 200 thousand and total indebtedness of € 100 thousand.
Social microcredit and students
The other type envisaged is the social microcredit reserved for natural persons in conditions of particular economic and social vulnerability, for amounts not exceeding 10 thousand euro , not backed by real guarantees but accompanied by auxiliary family budget services, in order to favor the social or financial inclusion of the beneficiary. Loans are disbursed at favorable conditions and include a 5-year repayment plan.
Then there is a third example of microcredit to students , aimed at the payment of training courses, including university or post-graduate courses, to facilitate their integration into the world of work. The duration of the microcredit can not exceed 10 years.