If in its infancy microcredit was born in the countries of the South, in South America and in Africa, it must be said that over the years, it has also aroused many interests in Europe. It was designed to help poor people in difficult situations. Today on the Old Continent, this financial assistance is offered, among others, to people to whom the banks do not want to lend money. Subscribing to it has many advantages.
Before addressing the advantages of microcredit, it would be appropriate to establish benchmarks as to what it really is, to the people for whom it is intended, and according to what conditions. This is financial assistance that is requested, generally when one is not able to consider a loan in the classic sense of the theme. It is then a question of financing which favors the implementation and the realization of a personal project.
Microcredit makes it possible to cope with the imperatives of daily life, unforeseen events that may occur and require the rapid mobilization of funds. Microcredit is perceived as the simplest solution envisaged in cases of emergency, as an alternative to a bank loan generally subject to a strict and restrictive procedure.
To hope to benefit from it, what is more when it comes to a personal loan, you must be a natural person. In addition to this, you must be able to meet the requirements of the lending organization, and demonstrate a repayment capacity. As a rule, such financial assistance is intended for people in financial difficulty, who cannot qualify for a traditional loan from a bank.
Microcredit has many advantages. This is also what justifies its growth for many years now, all over the world. The first advantage associated with it is the possibility of granting credit to people excluded from the traditional banking system. These are bank bans, and among others people who do not have substantial income allowing them to face such a commitment without risk.
In addition, it promotes access to financing for a project. Seen in this way, it can be compared to consumer credit which strengthens the beneficiary’s purchasing power. Microcredit, when it is well managed within the framework of an activity, is fairly quickly profitable, and allows the borrower to change his way of life. It is financial aid which, in the short term, is very beneficial for low-income households who have difficulty in living.
Moreover, it should be noted that these small credits indeed make it possible to set up a financial system, which is of great use for the rural populations. They are a financial aid which makes effective the existence of a financial potential in deprived people, who for the most part are located in rural areas. Microcredit is also easily accessible to these populations, and excludes administrative and time constraints.
Applications for this type of credit are managed by specialized organizations. Half of these are guaranteed by the State via the Caisse des dépôts et des consignations. The applicant will have to provide a certain number of documents for this purpose. It is essentially a receipt for payment of rent, a copy of the tax notice, proof of recent income.
As for the amounts of the microcredit, they are of the order of 300 to 5,000 euros, to be repaid on a scale ranging from 6 to 36 months depending on the case.